Who benefits most from a growing economy, workers or business? Of course, the answer is both. This is truer still when productivity is improving, so we should all be worried about the Productivity Commission’s finding that growth is at a six-decade low.
The Business Council also wants workers’ incomes to grow, but wage claims must be linked to productivity. Outsized wage gains now simply to match higher inflation would deliver only a fleeting win for a diminishing number of workers.Lower corporate profits ultimately would lead to less investment, weaker economic growth and higher unemployment. In the end, that would be lose-lose.
Indeed, many non-mining, non-financial businesses are struggling with cautious customers, cost blowouts, labour shortages and supply constraints.And, for many, there were the sledgehammer effects of COVID-19, from which many are still recovering.It’s true that recent growth in profits has exceeded the rise in economy-wide wages, as unions claim. But wages growth is “sticky”, as economists say.Very few employees are offered lower wages, even in an economic downturn.
A key driver of sluggish nominal wages growth is deteriorating productivity. It averaged around 1 per cent in the decade to 2021, half the rate from the halcyon days of the 1990s, despite the bounce out of the pandemic as output recovered faster than hours worked. The role of enterprise bargaining in lifting productivity and living standards is critical. EBAs allow workers and businesses to share the spoils of a growing economy by incentivising everyone towards better performance.
Laughable piece of fiction. dontwritecrap
But the additional business profits won't get eaten up by inflation - because mostly the shareholders are wealthy enough that they don't need to spend extra profit - so let's choose that option. Superb, if morally bankrupt, logic.