Decline in bargaining power affects the workers’ share of the Australian economic pie
The Organisation for Economic Cooperation and Development has pointed to a reduction in the bargaining power of workers to explain a change in labour’s share of Australia’s national income. The Organisation’s Employment Outlook for 2012 shows that between 1990 and 2007 the share of wages, salaries and benefits declined by 3.8 percentage points and by 5.1 percentage points if the mining and real estate industries were excluded.
Many factors have contributed to the decline, says the OECD, including increased domestic and international competition, higher productivity and capital-deepening.
“However, a reduction in the bargaining power of workers has played a role. Australia experienced one of the strongest declines in trade union membership in the OECD over that period, as well as a significant drop in the share of workers whose wages were set by collective agreements or awards. Such trends are likely to have reduced the bargaining power of workers, especially the low-skilled. The decline in the labour share in Australia has also been associated with an increase in wage and income inequality over recent decades.”