Wage rises need more than productivity growth

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Reserve Bank of Australia (RBA) governor, Phil Lowe, told Monday’s Senate Economics Legislation Committee in Canberra that wages won’t rise unless productivity increases:

“We’ve got to deliver you 2.5% inflation. It would be fantastic if we could deliver you growth in real wages of 1% or 2% a year but… if we are going to have growth in real wages of 1% to 2% a year, we’ve got to have strong productivity growth in the country. And that’s one reason why I keep talking about the productivity agenda”.

“Because we can only have growth in real wages over time if we get better at doing things”.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.