The Productivity Illusion
Why a decade of headline growth resulted in zero real wage increases, and how market concentration broke the link between effort and reward.
For sixty years, the basic macroeconomic bargain held: if labour productivity increased, real wages followed. Between 2012 and 2022, that link was severed in the Australian economy.
The Capital Shallowing Effect
Australia’s labour productivity growth averaged just 0.9% annually over the last decade. However, this headline figure masks a deeper structural issue: capital shallowing.
Business investment as a share of GDP has fallen from a peak of 18% in 2012 to around 10% today. We are not providing workers with better tools, technology, or processes; we are simply adding more workers to the same capital base.
Real Wage Erosion Calculator
Calculate the difference between your nominal wage increases (pegged to targets) and actual purchasing power.
Conclusion
Addressing this requires more than industrial relations tinkering. It requires a competition policy that breaks up entrenched duopolies and forces domestic capital to seek returns in productive enterprises rather than rent-seeking.