The clause in your job contract that costs you $500 a year – and Australia $7 billion
Australians handcuffed to their employers by contracts that stop them finding a better job are losing $500 a year, new research shows amid fears that childcare, GP clinics, aged care homes and dentist practices will be the next competition battlegrounds.
In a sign overall economic activity is being reduced, with the cost delivered to consumers through higher prices, Competition Minister Andrew Leigh on Monday will reveal that every Australian household is up to $7500 a year worse off due to a drop in real competition across the country since the turn of the century.
The lack of competition in the economy, and within businesses, is now costing households up to $7500 a year.Credit: Peter Rae
Competition issues around the world have grown in importance due to the rise of digital companies such as Apple, Meta and Google over the past decade and the demise of small to medium-sized businesses in everything from mining to the retail sector.
Increased protectionist policies, including the plans for incoming US president Donald Trump to impose tariffs of between 10 and 20 per cent on the goods of all countries exporting to America, have also added to fears the world economy will endure softer growth over coming years.
One area of concern is employers’ use of non-compete clauses or other restrictions on staff. Almost half of all Australian workers now have so-called restraint clauses as part of their employment agreements.
Non-compete clauses are just one of a range of growing restrictions being imposed on staff by their employers. They include contract clauses that prevent employers taking existing clients with them to a new business, stop working in the same industry for extended periods, and non-disclosure requirements.
Leigh will tell the Competition Policy for the Modern Economy Conference that non-compete clauses, which can prevent employees working for a competitor, mean affected staff earn 4 per cent less on average than someone not hindered by such restrictions.
“Extrapolating across the workforce, and accounting for the fact that one in five workers are subject to a non-compete clause, this implies that non‑competes are driving down average wages by more than $500 every year – equivalent to $7 billion annually,” he will say.
