Wage Stagnation: Impact of Fair Work Act and Economic Analysis

This report analyzes the issue of wage stagnation in Australia, identifying it as a significant economic concern impacting human resource development and industry productivity. It explores the role of the Fair Work Act, highlighting how its provisions, including minimum wage and protection from unfair dismissal, may contribute to wage stagnation. The report discusses the decline in unionization, the rise of casual work, and the impact of globalization and technological advancements as contributing factors. Furthermore, the report examines wage theft and the limitations of the Fair Work Act in addressing the need for wage increases aligned with worker expertise and experience. The conclusion suggests that wage stagnation may be a logical outcome of the Fair Work Act's current framework. The report references the Australian Bureau of Statistics and other sources to support its findings and offers an overview of the issue's complexity and its implications for workers and the economy.

Running head: WAGE STAGNATION
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Wage stagnation
Student Details

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Wage stagnation
Wage stagnation is the situation which results when the total output is declining and
impacting the wages of the workers being flat or no increase (Wisman, 2012). This is one of
the major economic issues which are impacting the human resource development as well as
the industry productivity.There are various companies which are following Fair Work act in
order to deal with inequality among the workers. The basic principles of Fair work system
include protection from unfair dismissal, and national minimum wage (Australian
Goverment, 2019). Australia is facing the slowest growth in this decade (Please refer to
appendix). Wage stagnation is one of the major issues which have become hurdle in the
growth of workers as the wages have not grown from last six years.
The causes for the wage stagnation can be the shift in employees by collective agreements
(Long, 2019). In Australia, most of the workers were unionized but now the percentage has
drastically reduced It is seen that the around 10% of private sectors and public sectors are
unionized. This leads to the manager become stronger on workers as wages are not able to be
negotiated in collective manner. Recently the wage stagnation issue can be suggested to be
solved through collective measures which includes living wage plan which is focused to
balance business concerns. This provision is in the process and the new elected government
of Australia has proposed to change the Fair work Act into fair work system which will take
consideration of the views of all business communities, employees, and unions (Remeikis,
2019). This system will also consider family benefits and other expenses like tax, and
household cost for the welfare of the industry workers
Another element which should be focused is casual workers. In Australia the casual workers
earn more than the permanent employees due to the difference is expertise which further led
the organizations to grow towards wage stagnation. Contract-based work and outsourcing
have significant contribution in making wages stagnate in current scenario. Wage theft is
altogether another issue which is being faced by the Australian corporates which has resulted
in breaching the legal wages and violate Australian laws into undercutting the wages of the
workers. It is important to note that globalization has also influenced wage stagnation as there
is abundant low-skilled labor available in developing countries. The technological innovation
has boosted the globalization in own way as the low skilled labor are being employed more
because of the use of updated technology and machinery in the workplace.
Although the aim of Fair Work Act is to stabilize the post-depression economy it has
resulted in a trap where the expert workers are being underpaid. The Fair Work act has
introduce minimum wage requirements of the worker to protect inequality but it is important
to note that the minimum wage is defined by analyzing the poverty threshold which is
sufficient only for the basic requirements of living. The goal of the worker to grow and
improve their standard of living is logically failed because of the act. The Fair Work act has
not included anything relating to increase in the payment of workers with change of time and

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expertise of the workers. It can be concluded that Wage Stagnation is the logical outcome of
Fair work act.
Bibliography
Australian Government, 2019. The Fair Work system. [Online] Available at:
https://www.fairwork.gov.au/about-us/legislation/the-fair-work-system [Accessed 20 August
2019].
Long, S., 2019. Wages stagnation, industrial laws and their effect on workers and business
owners. [Online] Available at: https://www.abc.net.au/news/2019-05-16/wages-growth-
stagnation,-industrial-laws-effect-workers-business/11118924 [Accessed 20 August 2019].
Remeikis, A., 2019. Labor's plan to change minimum wage to a 'living wage' revealed.
[Online] Available at: https://www.theguardian.com/australia-news/2019/mar/26/labors-plan-
to-change-minimum-wage-to-a-living-wage-revealed [Accessed 20 August 2019].
Wisman, J.D., 2012. Wage Stagnation, Rising Inequality and the Financial Crisis of 2008.
Department of Economics.

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Appendix
Source: Australian Bureau of Statistics, 2018