Why Are Australian Wages Lagging and What Can Be Done About It?

Wages in Australia have lagged behind the growth in labour productivity in recent years. This has been associated with a significant change in the distribution of income in favour of high‐income earners. Although a number of factors appear to have been involved in this development, an important explanation is also to be found in the change in the balance of power in favour of employers and against workers and unions. As changes in industrial relations laws have contributed substantially to this imbalance, a return to the earlier laws may be necessary to restore the institutional mechanism for wages growth.