[1] The Bank has discussed a range of reasons for that unexpected weakness,[2] including rising participation rates, heightened global competition, changes in bargaining arrangements and technology advancements. Another factor that contributed to the spare capacity in the labour market and affected wages growth was the long shadow cast by the end of the mining investment boom.
On the back of a boom in commodity prices, mining and mining-related investment rose from around 2 per cent of GDP prior to the boom to a peak of around 9 per cent in 2012. This massive expansion in productive capacity underpinned a sizeable and prolonged increase in the demand for Australian labour.