Wage inequalities among full-time workers
Peter Saunders
Social Policy Research Centre, UNSW
Contact Email:   p.saundersunsw.edu.au

After decades of strong centralised control, deregulation has been a feature of Australian labour market policy for much of the last two decades. Proponents of reform point to its beneficial impact on labour productivity and employment, while others are concerned about the effects on the distribution of wages, with some arguing that the low-paid in particular have become more exposed to inequalities in market power. If correct, this process will have undermined a powerful equalising force and a defining feature of the Australian ‘wage earner’s welfare state’. This paper contributes to this debate by tracking recent changes in wage inequality using data from the ABS Income Distribution Survey (IDS) and Survey of income and Housing Costs (SIHC). The analysis focuses on how patterns of wage inequality have changed among the full-time workforce since the 1980s, in aggregate and for sections of the full-time workforce defined on the basis of age, gender (for married men) the employment status of their partners. The findings indicate that inequality has increased over the period, with the highest paid workers doing best, while many workers at the bottom of the distribution have experienced real wage declines. In addition, the breakdowns examined display markedly different patterns of changing inequality, particularly those based on gender and the different employment combinations of couples. It is argued that these differences cast doubt on the view that changing wage inequality is a consequence of changes in the structure of labour demand as opposed to changes on the supply-side of the labour market.

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