By Wayne Cole and Swati Pandey
SYDNEY, June 19 (Reuters) - Australian workers are earning an ever smaller share of the nation's economic rewards in a reversal that threatens to scupper 26 years of uninterrupted growth
The share of national income going to households has shrunk to its smallest since 1964, the year the Beatles first toured Australia.
The present share of under 52 percent compares to almost 56 percent in 1991, a pay cut that works out to A$70 billion ($53.3 billion) a year, according to Reuters calculations.
Wages are rising at the slowest pace on record and, at an annual 1.9 percent, slipped below the inflation rate early this year. With household debt already at all-time highs, many consumers are having to save less just to cover essentials. The savings rate is at a 10-year low.
At the same time, business profits are taking the largest share of the income pot since 2011.
If not reversed, the trend could end Australia's remarkable recession-free run. The A$1.7 trillion economy expanded at its slowest pace in eight years last quarter, with annual growth of 1.7 percent.
"We think there has been a sustained step-down in the pace of consumer spending growth as households adjust to the new world order of very low wage growth amidst the confronting reality of high mortgage debt," said ANZ senior economist Felicity Emmett.
While this is a global phenomenon, Australians now get a smaller share of the income pie than households in most advanced nations, according to Capital Economics.
"It wasn't always this way, with Australian households being close to the top of the international ladder in 1975. But they may need to get used to life closer to the bottom," said chief economist Paul Dales.
As a share of gross domestic product (GDP), Capital Economics says, the compensation of Australian employees is below the United States, France, Canada, the United Kingdom and even Japan. That might surprise Japanese Prime Minister Shinzo Abe, who long has berated companies to pay more, with little success.
Possible reasons behind Australia's decline include the usual suspects - technological change, globalization, the growth of financial markets and the waning of worker bargaining power.
In 1991, around 40 percent of workers were in a union and now fewer than 15 percent are.
The Reserve Bank of Australia (RBA) has confessed to being perplexed, noting wage growth was well below what would normally be associated with the current unemployment rate, a four-year trough of 5.5 percent.
OLD ARGUMENTS UPENDED
More Australian policymakers have recognised the danger.