This analysis examines the impact of the Australian Council of Trade Unions’ (ACTU) application to the 1994 National Wage Case, on economic indicators such as employment, inflation, business investment, gross domestic product, interest rates and the current account balance by using the well respected econometric model devised by Mr Chris Murphy. The economic impact is assessed by inputting specific shocks to the Murphy Model along the lines of the wage increases proposed by the ACTU.

This paper examines the differences in outcomes between arbitrated wages increases and wage movements consistent with market conditions. Given the likely detrimental effect of wage increases sanctioned by tribunals, particularly on unemployment, there are a number of policy implications. These policy implications will also be examined.