Exploring the Decline in the Labour Share of GDP

The share of total economic output in Australia that is paid to workers (in the form of wages, salaries, and superannuation contributions) has been declining for decades. Workers produce more real output with each hour of labour (thanks to ongoing efficiency improvements and productivity growth), but growth in real wages has been much slower - and recently, real wages haven't been growing at all. The result is that labour's slice of the economic pie has been getting smaller. In fact, a recent Centre for Future Work report showed that in early 2017 the labour share of GDP hit its lowest level since the Australian Bureau of Statistics began collecting quarterly GDP data.

To explore the causes and consequences of this decline in workers' share of national income, the Centre for Future Work convened a special panel of experts at the Society for Heterodox Economists conference at UNSW in Sydney last December. The papers presented at that panel have been peer-reviewed and just published in the Journal of Australian Political Economy. We are very pleased to co-publish the 4 papers here.

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Possibly Surprising Insights on the Future of Work

Trade unionists are gathering this week at the ACTU's triennial Congress in Brisbane.  Jim Stanford, Director of the Centre for Future Work, participated in a panel on the Future of Work (an apt title!) at the Congress.

Here is his presentation: 5 Possibly Surprising Insights on the Future of Work.

More detail on the issues raised in his presentation is provided in the Centre's recent submission to the Senate Inquiry on the Future of Work and the Future of Workers.


Penalty Rate Cuts: Where's the Jobs Boom??

On 1 July 2018, workers in several retail and hospitality industries will experience a second reduction in the penalty rates they receive for working on Sundays and public holidays.  The reductions were ordered by the Fair Work Commission, and follow an initial reduction imposed on 1 July 2017.

Employer representatives argued that by reducing labour costs for work on Sundays and holidays, lower penalty rates would spur a big expansion in employment, via both new hiring and longer hours for existing workers.  One lobbyist predicted 40,000 new jobs.  Another said improved employment was "a certainty."

But a new report from the Centre for Future Work has examined employment and working hours in the retail and hospitality industries in the year since the first penalty rate reduction.  Far from spurring a jobs boom in the two sectors, they have actually significantly underperformed the rest of the economy on all of the indicators considered.

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Advanced Skills for Advanced Manufacturing

Australia's manufacturing industry is at a crossroads.  After years of decline, the sector has finally found a more stable economic footing, and many indicators point to an expansion in domestic  manufacturing in the coming years.  Manufacturing added almost 50,000 new jobs in the last year - making it one of the most important sources of new work in the whole economy.

However, one key factor that could hold back that continuing recovery is the inability of Australia’s present vocational education and training system, damaged by years of underfunding and failed policy experimentation, to meet the needs of manufacturing for highly-skilled workers.  The skills challenge facing manufacturing is all the more acute because of the transformation of the sector toward more specialised and disaggregated advanced manufacturing  processes.  This naturally implies greater demand for highly-trained workers, in all its occupations: production workers, licensed trades, technology specialists, and managers.

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The Dimensions of Insecure Work

Less than half of employed Australians now hold a “standard” job: that is, a permanent full-time paid job with leave entitlements.  That’s the startling finding of a new report on the growing insecurity of work published by the Centre for Future Work.

The report, The Dimensions of Insecure Work: A Factbook, reviews eleven statistical indicators of the growth in employment insecurity over the last five years: including part-time work, short hours, underemployment, casual jobs, marginal self-employment, and jobs paid minimum wages under modern awards.

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The Importance of Public Services in Regional NSW

Jobs providing essential public services – like health care, education, safety, parks, and more – are a pillar of strength in Australia's labour market.  Public sector jobs are generally good jobs, with decent pay and more security than is typical of many private sector positions.  The strategic importance of public sector work is all the more visible in regional communities.  Job-creation in private businesses hasn't been adequate to meet the needs of most regional communities, as private activity is increasingly concentrated in the major cities.  So good jobs in schools, hospitals, and public administration are essential to the well-being of regional towns.  Public service workplaces in smaller communities also function as economic "anchors": keeping the local economy well grounded, and supporting many spin-off jobs in the private sector (in consumer goods and services, transportation, construction, and more).

Unfortunately, the positive economic potential of public sector work in regional communities has been undermined in recent years by misguided policies of fiscal austerity, which have placed more emphasis on cutting government spending than on supporting regional communities.  A new report from the Centre for Future Work documents the erosion of public sector work in regional communities in NSW, relative to overall labour market growth.  From 2011 to 2016 alone, this relative shrinkage was equivalent to the loss of 6000 public sector jobs in regional communities in the state.  Of the 20 communities which experienced the greatest loss of public sector jobs in NSW in that period, 18 were located in regional NSW.

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Raising the Bar: Government Spending Power and Labour Standards

Australian governments could help to solve the problem of stagnating wages by better leveraging their own spending power in support of better wages and working conditions.  That’s the conclusion of new research from the Centre for Future Work at the Australia Institute on the connection between government spending and procurement and working conditions across the economy.

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Austerity Will Make WA's Economic Challenges Even Worse

Western Australia’s recent budget deficit is the result – not the cause – of deteriorating economic conditions. And contrary to calls for fiscal austerity and public sector downsizing, being made in response to the emergence of fiscal deficits in WA, the report showed that budget deficits played a useful role in stabilizing the economy during times of economic downturn, and will automatically recede as the economy recovers.

That is the message of a new report on WA's fiscal choices, by Dr. Cameron Murray and Troy Henderson, published by the Centre for Future Work.

“In reality there should be no alarm about the WA state deficit. Deficits are acceptable, and positive, during periods of weak economic growth.” says the Australia Institute’s Senior Economist, Dr. Cameron Murray.

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Rebuilding the NSW Workers Compensation System

Workers compensation benefits in New South Wales were dramatically reduced in 2012 by a newly-elected state government, citing an alleged financial crisis in the system.  Benefit payments (adjusted for inflation) declined 25 percent in just five years – and some cuts are still being imposed on injured workers and their families (including some losing benefits entirely).  But even as injured workers suffered the consequences of these benefit cuts, the financial position of the workers compensation system suddenly transformed from “famine to feast”: the supposedly dire deficit which justified the cutbacks disappeared entirely within one year, and by mid-2013 the fund was already back in surplus.  The system’s total surplus now exceeds $4 billion.

This report reveals the artificial nature of the supposed crisis which justified the 2012 cuts, and highlights the continuing positive financial trends that are generating ever larger surpluses.  It proposes a five-year timetable for restoring benefits to injured workers in NSW, without increasing average premium levels or incurring funding deficits.

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Portable Training System Would Help to Address Staff Crisis in NDIS Services

A new proposal for a portable training system for disability support workers under the NDIS would help to ensure the program achieves its goal of delivering high-quality, individualised services to people with disabilities. The proposal is developed in a new report from the Centre for Future Work.

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