Is faster profit growth essential for a pick-up in wages growth?
- Written by Saul Eslake, Vice-Chancellor’s Fellow, University of Tasmania
Do higher profits necessarily lead to higher wages? The answer, as borne out by the data below, might surprise you. In fact, wages growth is more likely to arise from smart policy settings that directly boost economic and employment growth.
Australian wages growth is, as Reserve Bank governor Philip Lowe recently noted, “the slowest since at least the mid-1960s”. Treasurer Scott Morrison recently asserted that a sustained increase in profitability is a prerequisite for a pick-up in wages growth.
But there is little data to support the idea that wages and profits are connected.
Authors: Saul Eslake, Vice-Chancellor’s Fellow, University of Tasmania
Read more http://theconversation.com/is-faster-profit-growth-essential-for-a-pick-up-in-wages-growth-83819