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Issue #1549      30 May 2012


Wage rises depend on struggle

The wages share of national income in 2011 was 53.1 percent, close to its lowest level since the 1960s: the profits share was close to an all-time record high of 28.6 percent. The Howard years took their toll on workers, seeing many workers suffer wage reductions as well as loss of entitlements. And every dollar less that employers pay in wages is a dollar more in profits. The profits-first private sector takes every opportunity to increase the exploitation of workers by reducing wages. That’s capitalism!

Not only has the share of income going to workers who produce the wealth declined, the gap between the wage rates of low paid, award dependent workers (no enterprise agreement) and higher paid workers has widened. The present minimum full-time, weekly wage of $589.30 ($15.51 per hour) is only 44 percent of average weekly ordinary time earnings. Fifteen years ago it was just under 50 percent. The purchasing power of households dependent on the minimum wage has not kept up with the rise in cost of living. The ranks of the “working poor” have been steadily swelling.

Fair Work Australia is in the final stages of its 2011-2012 annual Minimum Wages Review (MWR). These annual reviews by the Minimum Wage Panel (replacing the old Industrial Relations Commission) determine any increase in minimum award wage rates to maintain a “safety net of fair minimum wages”. Around 1.3 million workers depend on the minimum award rate – they are not covered by an enterprise bargaining agreement or other contract. These are the workers most likely to be found in casual and part-time, non-unionised employment – sales assistants, hospitality workers, cleaners, foods trade workers, carers and aides.

The 2012 MWR will be the third one under the Fair Work Act. The 2011 decision increased the minimum rate by $26 (the ACTU sought $28) per week. This year the ACTU is seeking for the lowest paid (4.4 percent) and 3.8 percent for workers on or above the benchmark tradesperson’s rate (C10 classification). This would bring the minimum full-time wage to $615.30 per week ($16.19 per hour) for adult workers.

The ACTU describes its claim as “moderate, affordable and appropriate”. It points out, in 2011 fruit and vegetable prices rose by 9.6 percent, petrol by 12.4 percent, electricity by 12.2 percent, childcare by 8.8 percent, and insurance by 7.2 percent. To say the claim is “moderate” is an understatement.

The Australian Chamber of Commerce and Industry (ACCI) grudgingly concedes an insulting $9.40 and the Australian Industry Group (Ai Group) $14 or two percent if the Minimum Wage Panel opts for a percentage increase. They’ve learnt arguing “no increase” does not work; it is better to argue for a small amount. It helps maintain the charade that there is no need for struggle to get a wage rise. They claim $26 per week is unaffordable and would result in higher unemployment. This is rubbish. The retail sector is laying off workers in droves due to lack of demand. Every extra dollar in the pockets of a low paid worker is an extra dollar spent, the larger the wage rise, the larger the increase in demand for goods and services and hence more jobs.

Unlike the national wage claims of three or four decades ago where decisions flowed to most workers, the average worker knows little about the claim, let alone taking industrial action in support of it. The wages struggle is being “fought” out around the table with economic arguments. Without industrial action or the threat of it, there is little pressure on the employers, the government or the Panel to meet the crying needs of the poorest workers.

Even if the Panel agrees that an increase of $26 is appropriate, workers are not likely to receive the full amount. The government and employers are demanding that the decision be discounted by the cost of forthcoming increases in the compulsory superannuation guarantee from nine percent to 12 percent in six small 0.5 percent increments up to 2020. They expect this to come out of low paid workers’ wages.

The concept of a “living wage” has slipped off the agenda. The government is indirectly subsidising corporate profits through its many “safety-net” payments to families where wages are not adequate to meet basic living costs. It should not be left to the government or charities to subsidise companies paying low wages. Workers should be paid a living wage as the very minimum.

Next article – Uranium mine approval a sign of systemic failure

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