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Benefits of Productivity Growth
Productivity growth is important for maintaining the economic welfare and prosperity of all Australians. Productivity growth can contribute to one or a combination of the following:
1. Higher wages: Productivity growth enables firms to increase wages for workers. Unit labor costs (ULCs), which measure the labor costs associated with producing one unit of output, decrease as labor productivity increases, meaning that firms can offset the effect of wage increases on profits with productivity improvements.
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