Real wages get welcome boost

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This is a good decision.

The Fair Work Commission has awarded an increase of 3.5% to up 2.6 million workers on minimum award rates to allow for low-paid workers to catch up on real wage cuts suffered during the pandemic.

The increase will lift the national minimum wage from $24.10 an hour, or $915.90 a week, to $24.94 an hour or about $948 a week.

The decision, which flows onto higher minimum rates in 120 awards covering the entire economy, will come into effect on July 1.

If we want to restore productivity, a good place to start is keeping wages as strong as possible.

Alas, this will not be strong given the nature of the permanent supply shock embedded in the immigration-led, labour market expansion economic model.

But stronger is still better to promote innovation and automation by employers who have for a very long time underperformed in terms of capital productivity.

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Money has a cost, and so investing it needs to be done more efficiently if you are going to lift multi-factor productivity.

One very good incentive is to raise wage costs.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.