Australian SMEs are helping to reinforce wage stagnation, a recent poll suggests, as a senior economist urges the government to take radical action to revert the destructive trend.
The straw poll, conducted on the My Business website, asked readers “With concerns mounting about wage stagnation, are you planning to give employees a pay rise this financial year?”
Nearly half (48.8 per cent) said they planned to either give no wage increase or even cut wages this year. A further one in four (25.6 per cent) said they would match inflation only.
Just 8.5 per cent said they would be providing their workforce with a substantial pay rise, while the remaining 17.1 per cent of businesses will provide a modest pay rise.
According to ABS data released this week, wages edged up by 0.5 per cent in seasonally adjusted terms in the June 2017 quarter and 1.9 per cent over the year.
Private sector wages increased by just 1.8 per cent, with a 2.4 per cent rise in public sector wages helping to boost the overall figure.
Commenting on the continuing wage stagnation, Deutsche Bank senior economist Adam Boyton told The Australian Financial Review that the government should consider a ‘reverse accord’ with businesses in a bid to lift wages, which would provide an all-important boost to the national economy.
“There are worse things for … a government to do than ask the Productivity Commission about how to lift wages growth,” he was reported as saying.
He suggested such an accord could be for aggressive deregulation of the corporate sector in exchange for substantive wage increases, so the benefits could be distributed more widely.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.