A lack of dynamism across the economy is contributing to lower wages and pushing up prices, new research suggests.
Australian businesses are becoming older, less competitive and more willing to increase mark-ups in a development new research suggests is putting downward pressures on real wages and the nation’s living standards.
On Thursday, Leigh will release Treasury and broader analysis showing that across a string of key metrics, the level of Australian economic dynamism has fallen over recent years, contributing to the slowdown in productivity growth. One measure of a country’s dynamism is the proportion of people shifting into new jobs. Between February 2002 and May 2008, 8.7 per cent of Australia’s workers started a new job in the previous three-month period.In the 11 years up to the end of 2019, this average had fallen to 7.3 per cent. In 2019 alone, it had slipped below 7 per cent. The rate has increased over the past six months as unemployment has fallen to a 48-year low but is still below the 2002-08 rate.
Leigh will reveal about a fifth of the slowdown in productivity growth in Australia since 2012 was due to increased market power.“Slower productivity growth means lower real wages and less buying power for households. It constrains the ability of the budget to build infrastructure and help poor people here and overseas,” he will say.
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