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Aussie Incomes Lag in OECD Amid Productivity Concerns

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Australia has recorded a sluggish rise in real per capita household disposable income over the past decade, making it the slowest growth among major English-speaking countries.

According to OECD data, from Q1 2015 to Q1 2025, Australian incomes only increased by 3.5%, starkly contrasted with Canada's 8.9%, the United States' 20.6%, and the United Kingdom's 8%.

The OECD average during this period was 18.7%, further highlighting Australia's economic challenges.

Recently released data from the Australian Bureau of Statistics signal a slight turnaround, with incomes rising by 2.4% in the 2024-2025 fiscal yearâ€”the most significant increase since late 2021. However, incomes are still 6.9% below their peak during the COVID-19 pandemic in mid-2022, returning to levels similar to 2020.

Veteran economist Chris Richardson has cautioned that without improvements in productivity, Australian incomes may not reach their pandemic-era peak until 2037. He attributes the recent increase to temporary factors, such as stage three tax cuts, lower inflation, and reduced interest rates, rather than sustained economic health.

Richardson states that unless productivity significantly improves, any gains in income will be unsustainable. He further suggests that if the Reserve Bank's forecast of a 0.7% annual productivity growth holdsâ€”a figure already optimistic compared to recent performanceâ€”Australian living standards may only climb back to their 2021 height by 2037.

The prospect of productivity growth appears challenging, given government strategies involving high levels of low-skilled immigration and increasing energy costs associated with achieving net-zero emissions. These factors could contribute to stagnant productivity, deteriorating living standards, and further deindustrialisation in Australia.

As policymakers and industry leaders grapple with these issues, significant measures to bolster productivity will be essential in reversing the current trajectory and securing long-term prosperity.

Published:Tuesday, 9th Sep 2025
Author: Paige Estritori

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