The Growth of the Australian Economy: Why Business Owners Benefited More than Workers
Posted by Tristan Angelini on 13 September 2022
According to the Australian Bureau of Statistics, Australia grew a strong economy in the three months to June, with the national output or GDP growing 0.9 percent and 3.6 percent throughout the year so far. What does this tell us? The increase in economic activity will benefit many people – but this time, it particularly helped business owners more than workers. Why is that?
The construction sector was one of the few ones that have experienced a decline, fortunately business owners still managed to see their business boom. Unfortunately, the problem lies in the number of workers. There has been some staff decline due to COVID. Because of this, many jobs were delayed. The shortage in staff was said to have affected the wages.
How has the economic growth affected the employees and employers? In what way? Let’s find out.
Over the quarter, Australians saw an increase in their wages–a 2.4 percent increase, provided that they worked more hours. According to records, about 2.9 percent more time was allotted for work due to the decrease in Omicron and flood-related absenteeism.
The interesting thing about this was that employers got more back because the actual unit labour costs decreased from 1.6 percent – now, it's down to 4.8 percent over the past year. This means that for every dollar they spent on their employees' wages, they got more output from them.
Unfortunately, the rising inflation in the country hasn't been too kind to many of the workers. Even with some statistics saying that wages have started to pick up, it hasn't felt that way because of the price growth.
The Cost of Living
The rising prices due to inflation has been affecting so many consumers. The growth in prices is much more unpredictable now than before – a $1.50 can of soda could instantly become $2.50 in a week or so. Cautious consumers are now cutting back on their spending.
Experts are saying that the current quarter is still showing strength in spending – having said that, they are predicting the likelihood of this continuing much longer doesn’t look so good. The boom in hospitality also looks unsustainable. Due to a number of pressures the economy has been experiencing since the June quarter, many experts are also cautious about their outlook on the country's economy.
Spending on Travel and Dining Out
It seems like Australians are not fazed with the current economic condition, with records showing that there has been an increased spending on domestic and international travel by households ever since COVID restrictions eased. This includes dining out – in restaurants and cafes and staying in hotels. According to stat reports, Australians spent money on overseas holidays.
According to Marcel Thieliant from Capital Economics, the GDP growth is expected to soften over the second half of 2022 and would possibly slow down in the first half of 2023.
However, ANZ senior economist Felicity Emmett states that Australia may be able to avoid a recession given the strength in households and businesses even during the rate hikes. It will ultimately depend on the global economy and the increase in challenges.
Company profits reach record highs as wages slump to a record low share of GDP. (2022, September 7). ABC News. https://www.abc.net.au/news/2022-09-07/gdp-june-quarter-2022-abs/101413546