Australia has one of the world’s least business-friendly hiring practices and wages, according to the World Economic Forum’s newest Global Competitiveness Report.
The report, released today, saw Australia drop out of the top 20 for the first time, falling to 21st place while New Zealand jumped 5 places to 18th.
Australia ranked highly for its financial system, education and training and macroeconomic situation with the third lowest public debt-to-GDP ratio among advanced economies, behind only Estonia and Luxembourg.
But it ranked near the lowest of 148 countries for red tape and labour market conditions. From the WEF report:
The main area of concern for Australia is the rigidity of its labor market (54th, down 12), where the situation has deteriorated further.
Australia ranks 137th for the rigidity of the hiring and firing practices and 135th for the rigidity of wage setting.
The quality of Australia’s public institutions is excellent except when comes to the burden of government regulation, where the country ranks a poor 128th.
Indeed, the business community cites labor regulations and bureaucratic red tape as being, respectively, the first and second most problematic factor for doing business in their country.
The Australian Industry Group, which consulted with the WEF for the report, said 17.3 of survey respondents saw restrictive labour conditions as the top difficulty of doing business in Australia.
“While Australia stacks up well in terms of its infrastructure and education system, the Report highlights further slippage in Australia’s international cost competitiveness,” Ai Group CEO Innes Willox said.
“These results highlight the high cost of doing business in Australia and the pressing need to improve key areas including industrial relations, business regulation and company tax in order to lift our international competitiveness.”
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