Labour productivity is a forgotten factor

Labour productivity is a forgotten factor

The RBI has repeatedly stated they want sustained wage growth of two to 3% before they’ll make serious moves.

Governor Lowe thinks low wage growth is fuelled by high immigration. His hand may be forced by input costs and a weak Aussie dollar long before border restrictions test the theory properly but there’s a deeper problem. Deep down in the data economy’s engine room, stalling labour productivity is tied to everything: Growth, ROI, wages and it’s slowly but steadily declining. Unless it turns around, any wage growth will be temporary, and put massive pressure on small and medium enterprises.

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