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Effective approaches needed to sustain wages and jobs growth

"The Opposition Leader, Bill Shorten, has today raised a number of important issues for consideration as we move towards the looming election campaign," Ai Group Chief Executive, Innes Willox, said today.

"The pace of wages growth in the past five years or so is clearly a fundamental issue of discussion – both in Australia and in other successful economies. In Australia in particular, the period of relative low real wages growth is a sharp contrast to the sorts of increases we had become used to over the preceding couple of decades. It should be noted that wages growth has kept pace with key indicators such as the cost of living index during this period.

"Addressing this issue is not simply a matter of lifting the pace of wage rises. This would ignore the reality that most employees are working in industries in which profits have not risen and would also ignore the risk of adverse employment impacts across these industries and across the economy more broadly.

"In developing effective and sustainable approaches to low wages growth we should focus on initiatives that worked to lift the capacity of employers to pay higher wages while maintaining the healthy pace of employment growth that has also characterised Australia's experience in recent years.

"In view of the slowdown in the economy since the middle of last year and as shown in today’s disappointing GDP data, there is a real risk that driving up wages with no compensatory measures to boost job creation in the high-employing parts of our economy would bring the period of strong workforce growth to a screeching halt.

"To put it simply, forcing higher wages on employers with no return would only serve to push people out of work and lessen the opportunities for young Australians to enter the workforce.

"At the most fundamental level, the key to achieving stronger wages growth is to lift the pace of productivity growth. A constructive approach to slower wages growth will require the combined efforts of employers and employees. It will not be assisted by fuelling division between employees and employers," Mr Willox said.

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