Industry wage agreements slow down productivity: RBA paper

Productivity and wages

For an industry with average award use, the paper found that annual employment growth for high productivity firms was 6.4 percentage points higher than for low productivity firms.But if award coverage rose by 5 percentage points, which was about the average increase from 2010 to 2018, the gap in employment growth fell to 5.9 percentage points – a decline of 0.5 of a percentage point.

Firms with workers on an industry award also had a weaker relationship between productivity and wages, amounting to one-third smaller than firms with workers on individual or enterprise agreements. He suggested firms’ use of industry awards might have increased because the cost and complexities of entering into enterprise agreements had become greater than the benefits.

Exactly right. It’s a move designed to do nothing other than give union’s more power. Consequence is loss of productivity and increase in costs/stoppages

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