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Lifting Aussie Wages: A Tough Mountain to Climb
- Like many advanced economies, Australia is seeing solid jobs growth combined with weak wages and productivity growth. The rise in the terms of trade prior to the financial crisis meant firms didn’t need to press productivity gains to build earnings. It’s been difficult to re-establish the productivity mantra since then. The recent pick-up in services output is positive in the near-term, but structural changes from population aging are a considerable headwind for both wages and productivity.
- The Retail, Administrative Support, Construction and Accommodation and Food industries account for 30% of the work force and they’re hiring older workers, lifting their pay and leaving behind their core of younger workers, who they are paying less. Government and Health account for 20% of the workforce and they tend to hire older workers. However, they’re increasingly paying them less in favour of hiring and paying more for younger workers. Moving away from the traditional worker demographic is containing the wage bill, but it could also be inhibiting productivity.
- Firms also appear to be managing their wage expenses by the cutting wage expenses for employees at the peak of their career. They are spending more on junior staff and older employees, which are a relatively small pool of workers.
- Workers are not changing jobs as they have in the past and an ever-increasing part of the workforce is preparing for retirement; these developments hardly seem to be positive for productivity. Full-time staff are seeing declining job security, while part-time staff are seeing increasing job security reflecting rising part-time employment.
Provider
Macro Strategy Advisors Pty Ltd
About us:
- The business is a Proprietary Limited Australian company that is owned and fully operated by Shane Lee from a small office in Sydney’s CBD.
- Shane worked for 17 years in Sydney-based senior research roles (economist, equity strategist and bond strategist) in global and regional investment banks and a domestic commercial bank prior to starting Macro Strategy Advisors. These roles straddled the asset classes making him uniquely positioned to advise multi-asset investors. He worked for the Reserve Bank of Australia (RBA) for 3 years as a housing, commercial property and equity market analyst and a liquidity forecasting specialist. He worked as a structural engineer in Queensland for 10 years prior to his career at the RBA.
Aim of our business:
- To partner with our clients in their aim to maximise returns. We provide timely, independent and thought-provoking research on thematic macro issues that are impacting or could impact financial markets. We aim to produce research that prompts our clients to question their assumptions.
Services:
- A fortnightly research note.
- Regular presentations and data support delivered by understanding our clients interests and investment process.
- We also in work in confidence to investigate, analyse and report on issues at our clients direction. This work is done on a project-by-project basis.
- As an Australian based business, the main focus is analysing how domestic and global issues impact Australian investors. However, our global and domestic insights are also valued by our offshore clients.
Our Edge:
- Our low cost base relative to our competitors allows us to provide a quality product at a reasonable cost.
- We are fully independent and don’t support a banking function or any third party. We have no interests other than providing our clients with the best possible research.
- Our focus is not point forecasting, but providing rigorous analysis and insight. We don’t routinely focus on the top or bottom 10% of likely outcomes to create a headline.
- Shane’s background in engineering has provided clients with unique insights into global infrastructure and domestic housing issues.
Shane Lee
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