The Governor of the Australian Central Bank, Philip Lowe stated his economy’s possibility of rising faster only if the lawmakers can get over deadlock, as signaling weak wage gains keep haunting even developed countries.
In Lowe’s speech at Canberra on Monday, he pointed out the need to channel effort towards reforms that will change the standards of living; else, the nation will find itself in the back row.
Polarity has characterized Australian politics since the global financial crisis in 2008; parties took advantage of others who don’t meet up to the proposed reforms. This means that since the introduction of the tax on goods and services in 2000, Australia hasn’t sealed any obvious economic reform.
Lowe stated that there is no lack of good ideas, but the good ideas available are not capable of driving the political process. He re-emphasized the vision of RBA that there will be significant growth in the coming years, with combined increase in the world economy.
Possible scenario of a lower per capita income
Lowe warned that the per capita income in the last quarter century might be bigger to the future ones, as Australia tried to desist from a slump then. The RBA chief stated that increasing population has actually affected Australia’s gross domestic product information, although a whole 26 years void of recession is a great achievement.
Lowe, speaking on the issue of weak wage growth that befalls the western countries, he made the panel know that when some nations are almost at the full employment level, other workers may feel discontent. He further highlighted the three fundamental causes of the weak wage growth.
Causes of weak wage growth
People tend to assign more value to employment security in a world of uncertainty, with the hope of increasing it without demanding for a higher wage rise. Likewise, workers feel insecure due to the possible dominance of robots and foreigners. Consequently, they hardly step up their price because of the possibility of higher competition. Then again, there is a decline in the rate of productivity, despite the increase in technology, Lowe pointed out that these causes may not change immediately.
Consequently, the nation has to get used to it
Because the jobs in some nations are not comfortable going through, as such, workers may get prepared for higher wage rises. Lowe attributed the driving force of growth in countries like Australian is the upcoming work in service companies, although natural resources remain significant in exportation revenue.
Lowe made it clear that all over the world, managerial ability, and technological capability stands tall as the pillar of competitive advantage, and this will not fade away. As such, there is the need to channel efforts towards this because there is no swift way out.