Wages in Australia will fall relative to emerging Asian and developed European economies in the next 20 years unless productivity is boosted, accounting giant PricewaterhouseCoopers says.
Of 21 economies analysed by PwC, Australia had the highest average monthly wage in 2011, followed by France, Canada and Japan.
But by 2030, Australia could move to fourth on the list, with South Korea pushing ahead to top spot.
Over the next two decades, PwC expects the average monthly wage in Australia to increase by less than $US400 to $US4,818.
South Korea's average monthly wage is expected to rise from $US2,361 to $US5,040.
Low productivity growth and an expected decline in the Australian dollar meant it was hard for wages, and therefore standards of living, to grow, PwC partner and economist Jeremy Thorpe said.
Australia needs to improve productivity through industrial relations and tax reform, and also needs to look at its immigration policy to ensure it attracts people with the right skills, Mr Thorpe said.
Companies also need to be willing to adapt the way they do business in order operate more efficiently, he said.
"Higher productivity growth is the only way to increase real wages and unless we tackle the productivity challenge, Australians may have seen the best of it, in terms of standard of living, for some time," Mr Thorpe said.
The PwC report found wages would grow most strongly in emerging economies such as China, Poland, Turkey, Mexico and South Africa, due to higher productivity growth.
But wages were also expected to grow faster in the UK, Germany, France and the UK, than in Australia.
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