The wages of Australian workers could almost double in real terms by 2060, with manufacturing showing the biggest potential, aided by technology adoption and better management practices, according to a new report.
The wages of Australian workers could almost double in real terms by 2060, with manufacturing showing the biggest potential, aided by technology adoption and better management practices, according to a new report.
The CSIRO’s Australian National Outlook report predicted wages would grow about 90 per cent in the half century ahead, driven by GDP growth of around 2.8 per cent in a best-case scenario of economic development.
But the alternative, a slow decline, would mean wages rise only 40 per cent in real terms.
The difference between those two outcomes is about $43,000 for the average adult full-time wage earner.
In a high scenario, average adult full-time earnings would be about $164,000 in 2060, compared with $86,600 this year.
That might sound significant, but it’s worth keeping in mind that average weekly earnings in 1970 were only $43,000, adjusted for inflation.
Manufacturing was particularly significant, with battery metals and food production cited as two examples of opportunities.
The report found a quarter of the difference in GDP between the low-case and high-case performances was attributable to manufacturing.
About 11 per cent was finance, insurance and ICT.
Management matters
Productivity growth will contribute about half of the overall difference in national production between the two scenarios, CSIRO said.
One driver would be technology adoption, which the report argues is still at an early stage and localised in certain companies and industries.
A series of broad measures was suggested to support productivity growth, including increasing market competition, incentives to improve innovation, better regulation that reduces barriers in markets, a more flexible labour market, and changes to migration policy.
But one surprising problem area was with management.
“When compared internationally, approximately 50 per cent of the productivity gap between Australia and the US is explained by management scores,” the report said.
“Two areas that could offer considerable returns include how skills are allocated and people management.
“Compared with international peers, Australia is quite inefficient in its level of over- and under-skilled workers, an area that may translate into an estimated direct productivity loss of over 6 per cent.”
Senior managers in business need to do better to attract and retain talent, the report said, while identifying innovative and practical ways to develop human capital.
“Improvements are to be gained in management practices through strong competition and flexible labour markets,” the report said.
“At an organisational level, being publicly listed or being exposed to international markets through supply chains or export can also have beneficial effects on performance.”
CSIRO futures director James Deverell said he hoped the report would be a clarion call for the country.
"We believe the positive outcomes in this report are all achievable, but they will require bold, concerted action and long-term thinking" he said.
“Emerging technologies will play a key role and Australian companies need to be aware of both the opportunities and challenges they will create.”
