Finance Your Budget Fight wage stagnation: how to boost your pay

Fight wage stagnation: how to boost your pay

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Experts have encouraged workers to band together and job hunt in order to overcome years of low wage growth.

New official data released last week found Australian wages are growing at one of the slowest rates in the world.

In 2016-17, average pay grew by just 1.9 per cent, the slowest rate of any financial year since modern records began in 1997.

It was only the second time Australian wages had failed to outpace inflation in a fiscal year. It translated to zero growth, once the cost of living was factored in.

Tim Harcourt, economist at the University of New South Wales, said the latest figures proved that workers lacked the confidence to demand pay rises.

“A lot of people have been burnt by household debt and they’re worried about interest rate rises,” Dr Harcourt told The New Daily.

“The labour market is still strong but we still need a lift in wages to improve income and improve consumption and there’s still nervousness of globalisation.”

How your wages are set

As recently explained by the Reserve Bank, wages are set one of three ways: by an award, a collective agreement, or an individual arrangement.

Awards set the minimum pay for each industry and occupation. Nearly a quarter of workers are on an award, primarily those in the service and retail sectors.

methods of setting pay

Collective agreements (mainly ‘enterprise bargaining agreements’ or ‘EBAs’) cover 36 per cent of workers. They are negotiated between unions and specific businesses, such as Woolworths and Coles.

Individual arrangements, made directly between employer and employee, cover the remaining 41 per cent.

So how can Australian workers get ahead?

1. Change jobs

Switching positions can be one of the fastest ways to a higher pay packet, according to experts.

Job figures released on Thursday showed that an extra 27,900 jobs were created in July, adding to the last five months of jobs growth, the strongest period in over 12 months.

Callam Pickering, economist at global job site Indeed, said this “creates opportunities”, as changing employers can provide a 20 per cent pay boost.

“Businesses are hiring right now and that creates opportunities. It makes sense to look at your options,” he told The New Daily.

“You can get a 20 per cent pay rise if you change jobs. When you change jobs you tend to get new skills and benefits that you might not have got if you stayed.”

2. Invest in education and training

Returning to study is another way workers can change careers and qualify for higher-paying positions.

A recent report by the Grattan Institute found that graduates with Bachelor’s degrees had better employability.

The unemployment rate for graduates was 3.4 per cent in 2015, compared to 4 per cent for those with a Diploma, 4.8 per cent for those with a Certificate III or IV, and 8.7 per cent for those with no qualification, the report found.

Graduates also earned more. Once education costs were factored in, the report found the median male bachelor earned $900,000 more over their lifetime compared to a male high school graduate, and women just under $1 million more.

3. Join a union

Dr Harcourt said Australians should either go work for “a progressive company that’s unionised and has good health and safety” or seek out a union for themselves.

Unions tend to help workers command better wages and negotiate from a stronger position. However, union membership in Australia now stands at only 10 per cent in the private sector and 38.5 per cent in the public sector.

The latest Reserve Bank data showed that wages set by collective bargaining paid the most on average ($39.60 an hour), followed by individual arrangements ($38.50) and awards ($29.60).

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