News & Current Affairs
24 April 2015
Australians' living standards face the greatest threat in a generation
Australian commuters are now spending an extra hour a week travelling to and from work, a new report has found.
Australians' living standards face the greatest threat in a generation, with no signs of strong wage growth, longer unpaid commuting times and a rise in workforce casualisation putting more pressure on middle- and lower-income households than they have faced in 20 years.
A new report from Per Capita, an independent think tank, also shows the split of national income between labour and capital is continuing to worsen in Australia, with wages' share of national income dropping from 65.5 per cent at the turn of the century to 59.7 per cent in 2012.
It says this has occurred at the same time as the bulk of productivity improvements have come from labour rather than capital in recent years.
The report, "Paradise Lost? The race to maintain Australian living standards", says Australians' living standards are under threat due to slowing productivity, rising unemployment and slowing wages growth.
It warns Australians face an "inevitable correction" in their income and wages levels - with real wages set to fall markedly to reflect the country's changed economic circumstances and lack of reform over the last decade - if nothing is done about it.
David Hetherington, Per Capita's director, warned Australian governments they must re-start the reform process now to arrest the worrying trends, saying the benefit of the economic reforms of the 1980s and '90s had run their course.
"Australia must either reform once again or face a dramatic downwards adjustment in wage levels and living standards," Mr Hetherington said.
"To continue to lift labour productivity, we must lift our investment in hard infrastructure like transport and broadband, as well as soft infrastructure like skills and education.
"[But] Australian governments must make the hard case to the electorate that 'budget repair' will take longer than expected, may involve tax rises and will certainly involve greater spending on infrastructure, education, skills and innovation."
The report comes just days after the governor of the Reserve Bank, Glenn Stevens, said the federal government had "little choice" but to accept the slower path of deficit reduction following a huge deterioration in the terms of trade.
The Per Capita report shows that, from 2001 to 2014, strong wage growth in Australia delivered a $484 increase in income each year for the average worker.
But since 2011 nominal wage growth has fallen each year, with real wages actually falling in 2013 - reducing the average worker's income by $118 that year.
The report also shows the average Australian worker is spending an extra 56 unpaid hours a year commuting to work.
In 2002, the average workers spent three hours 37 mins per week travelling to and from work.
By 2014, that had increased to four hours 50 minutes.
It says the workforce is also becoming increasingly casualised.
From 1992 to 2009, the number of part-time employees with paid leave more than doubled, the number of full-time casual employees doubled and the number of part-time casual employees rose by more than half, the report says.
By contrast, the numbers of self-employed and full-time employees with paid leave grew by less than 30 per cent, Bureau of Statistics data shows.