Workers’ slice of Australian economic pie gets smaller
As corporate profits continue to climb, new research from the Centre for Future Work shows the share of Australian GDP paid out to workers is hovering at a post-war low.
The Australia Institute’s Centre for Future Work has today published a new research symposium documenting how workers’ slice of the national economic pie continues to get smaller.
- From peak levels of 58 per cent of GDP in the mid-1970s labour compensation -- including wages, salaries, and superannuation contributions -- declined to just 47 percent in 2017, their lowest level since 1960.
- Real wages have consistently lagged behind the ongoing growth in labour productivity, meaning workers are not getting paid enough to buy back the goods and services they produce.
- The loss of labour’s share of GDP translates into the redirection of over $200 billion in income per year from workers to other groups in society (mostly corporations).
“In recent years, wages have barely kept up with consumer price inflation – and for many workers, they have fallen behind,” said Dr. Jim Stanford, Director of the Centre for Future Work.
“The fact that the workers’ slice of the economic pie continues to get smaller speaks volumes about the lopsided power imbalance in today’s labour market.
“The decline in Australia’s labour share from the 1970s peak to the present, ranks among the worst of all OECD countries, even worse than the United States.
“Almost the entire decline in the labour share has been reflected in a corresponding increase in the share of GDP going to corporate profits – especially the financial sector.
“In short, while the workers’ share has continued to get smaller, the share of corporate profits has continued to get larger.
“By comparison, in some countries the labour share has been stable or rose during the same period, disproving the claim that this trend is somehow ‘universal’ or ‘inevitable’.
“Without urgent measures to strengthen labour standards and protections, including stronger minimum wages and a restoration of meaningful collective bargaining, this decline will almost certainly continue.
“The company tax cuts for big business now being proposed by the federal government are just the icing on top of an already-rich cake.”
This research resulted from a special panel of experts convened by the Centre for Future Work, at the Society for Heterodox Economists conference at UNSW in Sydney last December. The papers from that panel have been peer-reviewed, and are published this week in the Journal of Australian Political Economy.
Authors contributing to the symposium include Dr.David Peetz (Griffith University), Dr. Shaun Wilson (Macquarie University), Dr. Margaret Mackenzie (Economist, Australian Council of Trade Unions), and Dr. Jim Stanford (Economist and Director of the Centre for Future Work). All of the articles, along with an introduction by Dr. Frances Flanagan and Prof. Frank Stilwell, are available on the Centre for Future Work website.