With Australia’s borders still shut, economists have forecasted that this can cause wages to see an unprecedented growth.
The foreign labor market has been competing for wages for years as employers have always had a large number of workers to choose from.
Wage Growth
But now as closed borders are creating the availability of fewer workers, it could mean the prospect of higher wages for the Australians.
Reserve Bank of Australia Governor Dr Philip Lowe presented the good news at an economic conference on Thursday.
“If the borders remain completely closed and we are unable to source workers in the country needed by the firms to grow and invest, I think we will see more wage growth,” he said.
Wage growth used to be at the highest level of 4 percent but now that figure is close to 1.5 percent.
Fall In Wages In Australia
If you calculate that percentage by the average salary of $ 59,538, that means the Aussies have lost $ 1500 a year from a salary stand.
Since the outbreak began in March, 250,000 overseas workers have left the country, according to Dr Lowe.
Too many employees, “can reduce the business incentive to train employees to do the required work,” he said.
Shane Oliver, chief economist at AMP Capital, said wage growth rates had changed dramatically in the last 15 years and Australia could see a return to pre-GFC standards.
There has been a real “pay cut” since Australia’s 4 percent high in the early 2000’s.
What Are The Experts Saying?
“We’ve gone from a world where we used to see 3-4 per cent (wage growth) fairly consistently and now we’re in a world of sub two per cent (growth),” Mr Oliver told news.com.au.
“Prior to the GFC (in 2008) it was regularly around 4 per cent. Post-GFC it’s been steadily trending down. In a range of 1.5 – 2.5, in recent years it’s been the low end of that. It’s well and truly slowed down since 2013.”
If the mediocre Aussie made $ 59,538, then if wage growth was at its highest level now (four percent), the Aussies could earn another $ 2381.
But instead, it is very low (1.5 percent) which is only $ 893 extra. That means Aussies miss about $ 1500 a year.