A non-compete clause effectively prevents a business from poaching workers from a rival firm. In some overseas cases,they can stop a person from working with a rival business for several years,making it virtually impossible for them to shift to a better-paid position in the same industry.
Leigh,an economics professor before entering parliament,will also release Treasury analysis suggesting concentration among businesses across the Australian economy lowered wages by about one per cent through the first half of the 2010s.
Wages growth slowed to record low rates ahead of and during the COVID-19 pandemic,with policy analysts,governments and central banks struggling to understand why it was occurring. The Reserve Bank constantly forecasted a lift in wages growth through the 2010s,but it did not eventuate. Over the past year,wages growth in Australia has lifted to a decade-high rate of 3.3 per cent. But after inflation,wages are falling in real terms attheir fastest rate on record.
In a speech in Melbourne,Leigh will argue one of the factors for the wages slowdown has been increased concentration across the jobs market,with workers restricted in their choice of prospective employers.
He will say businesses in markets with few competitors are able to exercise what is described as “monopsony power”. Monopoly power is the ability of one or a small number of businesses to set prices paid by consumers.
A monopsony is where prices are set by the buyer,such as where there are few employers and a large potential workforce.