Topic: Australian Economy

Australian Economy
Photo: Sarote Pruksachat

The Effect of Minimum Wage Increases on Wages, Hours Worked and Job Loss

James Bishop

Australia has a detailed system of ‘awards’ that specify different minimum wages depending on the industry, location and skill of an employee. I find that legislated adjustments to award wages in Australia between 1998 and 2008 were almost fully passed on to wages in award-reliant jobs. There is no evidence that modest, incremental increases in award wages had an adverse effect on hours worked or the job destruction rate.

wages, employment
Australian Economy
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Access to Small Business Finance

Ellis Connolly and Joel Bank

The Reserve Bank has conducted additional outreach this year to hear a broad range of perspectives on small business finance. Many small businesses looking to grow still find it challenging to access finance, particularly without providing real estate as security. Lenders highlight that they are keen to lend to small businesses, but that unsecured finance involves more risk. This article considers these issues and outlines some initiatives market participants have suggested that could help to improve access to finance for small businesses.

business, credit, start-ups
Australian Economy
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Firm-level Insights into IT Use

Sharon Lai, Emily Poole and Tom Rosewall

Firms in Australia have used advances in information and communication technology (IT) to become more productive, reduce costs, and improve their understanding of customers. The rate at which new technology has been adopted by firms differs greatly, as do the benefits from using IT. The way firms are using IT can help to explain trends in the broader economy. Firms' expenditure on computer software has grown faster than other forms of investment. The adoption of new technology is also changing the composition of jobs in the economy.

technology, business, employment, automation
Australian Economy
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The Cyclical Behaviour of Labour Force Participation

Richard Evans, Angus Moore and Daniel Rees

When economic conditions improve, more people enter the labour force. Understanding the nature of this cyclical relationship between participation and economic activity is important for determining the amount of slack in the labour market and predicting how the economy will respond to changes in economic conditions. The participation rates of young people, 25–54-year-old females and older males are the most responsive to changes in economic conditions. If the participation rate did not adjust, expansions would be more inflationary, while recessions would be more disinflationary and lead to larger increases in involuntary unemployment.

wages, employment, inflation
Australian Economy Image showing transmission of data.
Photo: spainter_vfx – Getty Images

Banking Fees in Australia

Emily Perry and Christian Maruthiah

The Reserve Bank has conducted a survey on bank fees each year since 1997. The most recent survey suggests that banks' fee income from both households and businesses rose in 2017, due to a combination of growth in the volume of services for which fees are charged and higher unit fees on some products. Deposit fee income continued to decline relative to the value of outstanding deposits, while lending fee income as a share of assets was steady. Greater use of electronic payment methods continued to support strong growth in merchant service fee income

Banks, technology, rba survey
Australian Economy University graduates, mortar board hats
Photo: PeopleImages – Getty Images

Labour Market Outcomes for Younger People

Zoya Dhillon and Natasha Cassidy

Monitoring developments in the labour market for younger people is important, because they make up a large share of unemployment in the economy, and because early-career labour market outcomes can affect future outcomes. This article outlines the demand and supply factors that have affected 15–24 year old workers in Australia. In particular, we analyse the factors affecting their participation in the labour force, such as increased education attainment. We also show how younger workers are more adversely affected than the rest of the population when economic conditions slow. Over the past decade, increases in the unemployment and underemployment rates for younger people have been over twice as large as for the overall labour market. The share of 20–24 year olds that have become disengaged from either study or work has also increased.

Employment, Wages
Australian Economy Crane over construction workers at sunny construction site
Photo: Caiaimage/Trevor Adeline – Getty Images

Private Non-mining Investment in Australia

Michelle van der Merwe, Lynne Cockerell, Mark Chambers and Jarkko Jääskelä

While mining investment has risen in importance over recent decades, the non-mining investment share of output has fallen. This article explores some of the factors that have contributed to the downward trend in the non-mining investment share over time. The article finds that the future non-mining investment share could be around 1–2 percentage points lower on average than it was in the two decades before the financial crisis.

Investment, Capex, Manufacturing, Household Services, Business Services, Technology
Australian Economy Heavy mining equipment sits among large piles of red earth
Photo: Cuhrig – Getty Images

Mining Investment Beyond the Boom

Keaton Jenner, Aaron Walker, Cathie Close and Trent Saunders

The construction phase of Australia's mining boom is now almost complete. In this article, we use two complementary approaches to investigate what mining investment might look like look over the next decade or so. The first approach explores the long-run determinants of mining investment and its likely long-run share of GDP. We then take a bottom-up approach, focusing on the amount of investment that will be required to maintain firms' existing productive capacity; in this approach we focus on Australia's three major commodities (coal, iron ore and liquefied natural gas). The analysis suggests that mining investment will likely make up a larger share of GDP than it did before the boom, and that it will continue to play an important role in driving movements in Australia's economic activity.

mining, resources sector, investment, capex
Australian Economy A blue ribbon connects a bright light bulb to an array of cogs
Photo: Chao Fann – Getty Images

Structural Change in the Australian Economy

Rachel Adeney

The structure of the Australian economy has changed significantly over the past 50 years. Services have become an increasingly important part of the economy. Supply chains have lengthened as traditional goods-producing industries have become more specialised in their core activities and outsourced their non-core activities to the business services sector. These developments have had significant implications for the composition of employment and the skill requirements of the Australian labour force.

services sector, employment
Australian Economy A woman explains the content of a computer screen to a male colleague
Photo: Scyther5 – Getty Images

Perceptions of Job Security in Australia

James Foster and Rochelle Guttmann

A concern that low job security is constraining wage growth has been expressed in many countries. Using data on Australian households over time, this article finds that workers' perceptions of their own job security have declined in recent years. This deterioration has occurred across many job and personal characteristics. These weaker job security perceptions have provided a small drag on wage growth.

employment, wages, automation
Australian Economy A highrise building stands out among lower suburb buildings.
Photo: Simon Bradfield – Getty Images

The Distribution of Mortgage Rates

Michelle Bergmann and Michael Tran

Mortgage interest rates can vary considerably across borrowers and are typically less than the standard variable rates (SVRs) advertised by banks. This article uses loan-level data to explore the relationships between interest rates and the characteristics of borrowers and their loans. Mortgages with riskier characteristics tend to have higher interest rates. Discounts applied to SVRs have tended to increase over recent years, and are also influenced by the type of loan and its size.

mortgages, interest rates, securitisation

The graphs in the Bulletin were generated using Mathematica.

ISSN 1837-7211 (Online)