Australian wages will fall behind unless productivity improves, says PwC

http://www.theguardian.com/world/2013/oct/02/australian-wages-fall-behind-productivity

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Wages in Australia will fall relative to emerging Asian and developed European economies in the next 20 years unless productivity is boosted, the accounting group PricewaterhouseCoopers says.

Of 21 economies analysed by PwC, Australia had the highest average monthly wage in 2011, followed by France, Canada and Japan. But by 2030 Australia could move to fourth on the list, with South Korea pushing ahead to top spot.

Over the next two decades, PwC expects the average monthly wage in Australia to increase by less than US$400 to US$4,818. South Korea's average monthly wage is expected to rise from US$2,361 to US$5,040.

Low productivity growth and an expected decline in the Australian dollar meant it was hard for wages, and therefore standards of living, to grow, said a PwC partner and economist, Jeremy Thorpe.

Australia needed to improve productivity through industrial relations and tax reform, and also needed to look at its immigration policy to ensure it attracted people with the right skills, Thorpe said.

Companies also needed to be willing to adapt the way they did business to operate more efficiently, he said.

"Higher productivity growth is the only way to increase real wages and, unless we tackle the productivity challenge, Australians may have seen the best of it, in terms of standard of living, for some time," Thorpe said.

The PwC report found wages would grow most strongly in emerging economies such as China, Poland, Turkey, Mexico and South Africa, owing to higher productivity growth.

But wages were also expected to grow faster in Britain, Germany and France than in Australia.

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