Latest news with #AustralianEconomy
The Guardian
14 hours ago
- Business
- The Guardian
A three-day working week or higher pay: what a more productive economy could buy Australians
Australians would have a three-day working week if we had collectively decided in 1980 to spend all the productivity gains of the following decades on leisure time instead of buying more stuff, according to the Productivity Commission. Jim Chalmers has kickstarted a national conversation about reforming the economy to make Australia more productive to underpin the next generation of prosperity. There are plenty of disagreements about how this can be done, but there is general consensus that we should try. But another question has been left unasked: if we are successful in lifting productivity, what should we do with the dividends of our success? Or more simply: do we want to work less and spend the same, or do we want to work more and spend more? Looking at history, the answer has been a combination of the two, according to Rusha Das, a research economist at the Productivity Commission. In a new paper, Das calculated that Australians used only 23% of the productivity 'dividend' from the past 40-plus years to work less, while we banked the remaining 77% as higher income. 'Rather than spending our productivity dividend on more spare time, we have largely traded it for higher incomes, and more and better stuff,' Das said. This choice of how to spend the fruits of higher productivity is rarely presented to us in such simple terms. A typical employer doesn't ask if their staff want to work 5% less or have a 5% pay rise, for example. Sign up for Guardian Australia's breaking news email 'Instead, the effects of productivity gains are more subtly embedded in our lives, granting us more agency over how we live and work,' Das said. 'It may be taking a half-day each fortnight, investing time in professional development rather than taking on additional clients, or deciding to expand the number of cattle on a dairy farm. 'All these are choices that reflect the underlying freedom that productivity growth makes possible.' The economist John Maynard Keynes in 1930 famously predicted that technological advances meant his grandchildren would be working just 15 hours a week without being any worse off materially. Das said that prediction was not necessarily wrong, it's just that we have made different choices. 'With the growth in labour productivity Australia has enjoyed since 1980, Australians could have reduced their average hours worked by 15 hours per week without lowering consumption levels,' she said. Or we could have used all of the productivity dividend on working more and spending more – in which case GDP per capita would be 11% higher now than in 1980. Das said the choice between leisure and consumption can be influenced by a number of factors. Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion If we feel like the changes that are making us more productive are short term, then we'll work more to take advantage of it while we can, and vice versa. Government policy plays a part – whether it's higher tax rates that disincentivise working that extra hour, or workplace rules that allow people more flexibility. Cultural values also have a hand, Das said. In France there is a strong tendency to choose more leisure time, while in the US it is the opposite, her research showed. 'For example, there is a saying that in the UK the last one to leave the office is seen as the hardest working, whereas in Germany the last one to leave is seen as the least efficient.' And these values change through time. Next year will mark a century of working five days a week, after carmaker Henry Ford reduced it to five days from six. As we approach this milestone, more companies are implementing or trialling four-day working weeks, while the Greens before the May election launched a four-day work week policy. Das said keeping up our high levels of work 'could be a good thing if it reflects greater voluntary participation in the workforce': workers choosing to improve their living standards, or it's the result of removing historical barriers that have held some segments of society back. 'But it is concerning if Australians have been working more out of sheer necessity, sacrificing study, rest or time with loved ones just to maintain their standard of living. 'For example, people may need to work more just to keep up with rising house prices, which has outpaced wage growth over a long period of time.'
SBS Australia
21 hours ago
- Business
- SBS Australia
The problem that could cost Australia more than $8 billion every year
Australia is experiencing climate-related extreme weather events, such as fires and floods, more frequently. Source: Getty / Roni Bintang From droughts to fires, cyclones, and floods, Australia has been hit with a series of devastating extreme weather events, and the financial burden is becoming increasingly heavy. According to a new Climate Change Authority (CCA) report, back-to-back disasters have cost the Australian economy $2.2 billion in the first half of 2025 alone. The cost is projected to rise to $8.7 billion annually by 2050 without strong action, the report stated. The Home safe: National leadership in adapting to a changing climate report examines the increasing frequency of extreme weather events and calls for national leadership on climate action. The Insurance Council of Australia estimates bushfires, cyclones, and floods are costing Australian homeowners around $4 billion each year, from a combination of both insured and uninsured losses, mental health impacts, and loss of housing and employment. Costs are rising as the climate changes and hazards become more frequent and severe, with regions and homes that were previously unaffected now becoming at risk, according to the Climate Change Authority. Climate Change Authority chair Matt Kean said: "Our homes are our sanctuaries — and the biggest financial investment most Australians will ever make." The report referenced recent research from the Insurance Council of Australia (ICA), the Treasury, and The McKell Institute into the costs of residential building damage resulting from extreme weather. The research found the cost to residential buildings is $2 billion a year for cyclones, $1.5 billion a year for floods and $486 million a year for bushfires. As these events become more frequent, the cost of insurance premiums has also increased. The CCA examined research from the Actuaries Institute and ICA, which found insurance claims for ex-Tropical Cyclone Alfred and the North Queensland floods exceeded $1.2 billion. As cost of living pressures also increase, 15 per cent of Australian households experienced home insurance affordability stress in 2024, according to the research. Climate-related disasters can also have a lasting impact on property prices in affected areas, and the report projects climate change could wipe over $500 billion off the Australian property market by 2030. Property damage is not the only economic impact of climate change and extreme weather events. Alongside housing costs, Australians are also facing costly impacts to their physical health, mental health, displacement, and impacts on their ability to work and study, the report said. The CCA has called on the government to take steps to reduce the risks and costs associated with climate-related extreme weather events. The report's recommendations include making appropriate investments in infrastructure and services, ensuring standards, laws and regulations are fit-for-purpose for a changing climate, and equipping Australians with the information and resources to improve their decision-making. Research by the CSIRO, Australia's national science agency, found every dollar invested in climate adaptation or disaster risk reduction saves $2 to $11 in recovery costs. "Authorities will need to review and tighten building codes. Parts of coastal Queensland and WA not now covered by cyclone construction standards may need to be, and soon," Kean said. "These are the kinds of practical steps we can take to make Australia more resilient in a changing climate." A spokesperson from the Department of Climate Change, Energy, the Environment and Water said work is underway across all levels of government and the private sector to improve the resilience of infrastructure, services, and the built environment. "The government released the National Climate Risk Assessment first pass in March 2024, and is now progressing to the full release of Australia's first National Climate Risk Assessment as a matter of priority, in addition to a corresponding National Adaptation Plan," the spokesperson said. "The National Adaptation Plan will represent a step change in the Australian government's response to climate change. It establishes, for the first time, a framework for adapting to the physical climate risks that are nationally significant." The National Climate Risk Assessment identified 56 nationally significant climate risks facing Australia, along with a subset of 11 priority risks that require further analysis. It is being used by the government to examine the impacts and risks to Australia from climate change. Current planning and investments in infrastructure and services include the Critical Infrastructure Resilience Strategy and Plan, the Disaster Ready Fund, and the Queensland Betterment Funds program.
SBS Australia
a day ago
- Business
- SBS Australia
Australia's unemployment rate set to remain steady at 4.1 per cent
Australia's jobless rate is expected to remain low, while those seeking new work are likely to receive a boost to their pay packets. Labour force figures for May, to be released on Thursday, are tipped to show the unemployment rate holds steady at 4.1 per cent. Economists predict about 20,000 new jobs were added to the economy for the month of May, following a bumper increase of 89,000 in April. With the labour force participation rate also set to remain unchanged at 67.1 per cent, the Australian Bureau of Statistics figures are poised to show a tightening of the jobs market. Listed salaries have increased by 3.6 per cent for the year to May, according to a report by online job site Seek. The site's advertised salary index showed growth in pay rates for new positions has remained steady over the past year. But monthly growth in May was just 0.2 per cent, the smallest one-month increase since October. Seek senior economist Blair Chapman said the increase in wages advertised was a welcome rise. "The growth in average advertised salaries is currently outpacing living costs, which is good news for those switching employers as they are likely gaining a real wage increase," he said. "This means they can purchase more goods and services or save some of their additional earnings." Treasurer Jim Chalmers said reducing unemployment levels had also been accompanied by a decrease in inflation. "No major advanced economy has combined unemployment in the low 4s with inflation under 2.5 and three years of continuous growth," he said in an address at the National Press Club on Wednesday. "We know this welcome progress in the national aggregate data doesn't always translate into how people are feeling and faring in local communities. But real wages are growing again." Chalmers has flagged potential tax reform during his second term in the role, which will be examined at a productivity summit to be held in Canberra in August. "This is all about testing the country's reform appetite. "I am prepared to do my bit, the government is prepared to do its bit, and what we'll find out in the course of the next few months is whether everyone is prepared to do their bit as well."
Yahoo
a day ago
- Business
- Yahoo
Unemployment to hold steady as pay packets swell
Australia's jobless rate is tipped to remain low, while those seeking new work are in line for a boost to their pay packets. Labour force figures for May, to be released on Thursday, are tipped to show the unemployment rate hold steady at 4.1 per cent. Economists predict about 20,000 new jobs will be added to the economy for the month, following a bumper increase of 89,000 in April. With the labour force participation rate also set to remain unchanged at 67.1 per cent, the Australian Bureau of Statistics figures are poised to show a tightening of the jobs market. Listed salaries have increased by 3.6 per cent for the year to May, according to a report by online job site Seek. The site's advertised salary index showed growth in pay rates for new positions have remained steady over the past year. But monthly growth in May was just 0.2 per cent, the smallest one-month increase since October. Seek senior economist Blair Chapman said the increase in wages advertised was a welcome rise. "The growth in average advertised salaries is currently outpacing living costs, which is good news for those switching employers as they are likely gaining a real wage increase," he said. "This means they can purchase more goods and services or save some of their additional earnings." Treasurer Jim Chalmers said reducing levels of unemployment had come about while inflation had also been brought down. This is why economic reform matters. We've made a lot of progress together in our first term making our economy more productive, dynamic and resilient to help deliver a better standard of living for all know there's more to do and that's why the reform… — Jim Chalmers MP (@JEChalmers) June 18, 2025 "No major advanced economy has combined unemployment in the low 4s with inflation under 2.5 and three years of continuous growth," he said in an address at the National Press Club on Wednesday. "We know this welcome progress in the national aggregate data doesn't always translate into how people are feeling and faring in local communities. But real wages are growing again." The treasurer has flagged potential tax reform during his second term in the role, which will be examined at a productivity summit to be held in Canberra in August. "This is all about testing the country's reform appetite," Dr Chalmers said. "I am prepared to do my bit, the government is prepared to do its bit, and what we'll find out in the course of the next few months is whether everyone is prepared to do their bit as well."
News.com.au
2 days ago
- Business
- News.com.au
Economy must modernise as ‘new rules of trade' take affect, Treasurer Jim Chalmers warns
Jim Chalmers has warned of a 'world of churn and change' that will impact the Australian economy as he outlines plans to see the nation through the current uncertainty. The Treasurer has warned 'the rules of trade have changed', meaning Australia will need to modernise its economy or risk living standards. In a speech to the National Press Club on Wednesday, the Treasurer is expected to warn the Australian economy will be impacted by the weakest global growth in two decades, spiking oil prices out of the Middle East and a new global order. 'It's a perilous moment there and that means even more perilous times for the global economy too,' he will say, referring to the Middle East conflicts. Mr Chalmers will highlight the IMF is currently saying trade uncertainty is seven times higher than just nine months earlier at a point higher than the pandemic. 'The rules and ideas that made up what we thought of as the global order are being rewritten,' he will say. 'This is the fourth economic shock now in less than two decades, a near permanent state of upheaval. 'Where shifts in energy, industry, demography and technology shape the bigger backdrop.' Despite the global backdrop, Mr Chalmers will say Australia can achieve its goals by modernising the economy and 'maximising our advantages.' 'In this world of churn and change we like our chances,' Mr Chalmers will say. 'But only if we make our economy even more resilient. 'By securing capital and shoring up supply chains, building more partnerships in our region and diversifying our trade and modernising our economy and maximising our advantages.' The Treasurer's speech will allude to pressures on global growth as outlined by the World Bank's latest forecast. Analysis released this week by the World Bank predicts global growth will slow to 2.3 per cent in 2025, down from 2.8 per cent this time last year. This is a downgrade of 0.4 per cent since the start of the year. If the World Bank's forecasts come true, this would be the weakest period outside of the worldwide recessionary periods of the GFC from 2007-2009 and the Covid pandemic at the beginning of the decade. The World Bank's bleak forecasts comes as the US GDP came in at negative 0.3 per cent for the first three months of the calendar year. According to the latest ABS figures, GDP rose in the March quarter by 0.2 per cent and 1.3 per cent year-on-year. But that anaemic growth was not enough to keep Australia out of a per capita recession, with the nation going backwards by 0.2 per cent per person. Mr Chalmers will say the best defence to this slowing economy is to lift living standards, create a more productive economy and a stronger budget. He will discuss the upcoming productivity round table to be held in August. 'By now our shortage of productivity growth is well known and broadly understood,' he will say. 'Almost every comparable country has the same challenge. 'Our own productivity problem hasn't been with us for a couple of years, it's been with us for a couple of decades. 'In the ten years before the pandemic, productivity grew only half as fast as it had two decades earlier. 'The 2022 election coincided with the largest quarterly fall in productivity growth in almost half a century.' Mr Chalmers will say there was more work to be done, but it started with cutting taxes, boosting wages, restoring real incomes while also repairing the budget and fighting inflation. 'To deliver higher living standards for our people we recognise three blunt truths,' Mr Chalmers will say. 'Our budget is stronger, but not yet sustainable enough. 'Our economy is growing, but not productive enough. 'It's resilient, but not resilient enough – in the face of all this global economic volatility.'
