Thursday, October 3, 2013

Australian wages will fall behind unless productivity improves

In the article I read this week. Its titled stated that Australian wages  which had the highest average monthly wage in 2011 will fall behind unless productivity improves . When it stated that wages will fall behind the article meant that the wage would not increase as rapidly as in China, Poland, Turkey, Mexico and South Africa which in the this article are stated to be growing in productivity. Unfortunately low productivity will not be the only factor to effect low wages because an expected drop in the Australian dollar will also affect the wage. In the end what will help Australia increase productivity to increase wages is to improve productivity through industrial relations, tax reforms, and a review on the current immigration policy to attract people with the wanted skills.Now as we learned in class a country with a higher MPL or Marginal productivity of Labor means a higher wage and a higher standard of living so it is true that if productivity does not increase then wages will not increase. The solutions in the article seem to be each valid in someway. In the idea to look at immigration policy I can see that this would make the factor of Labor which in class we always see as fixed increase and this idea while we have not discussed in detail we can begin to think that in a way it is a little impractical to see labor as fixed depending on immigration. When it comes to industrial relations I can only think about somewhat help them import or operate more. Unfortunately I can't think about a way that tax reform can help since it would distribute tax money differently but where to?Lastly I would like to leave you readers with some food for thought. If we have a slow or none existant increase in wage will the standard of living change? In fact what will happen to standard of living in this situation? The reason I ask is because I believe that people are arrogant and they would prefer to go to debt instead of decreasing the standard of living in the country.

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