Wednesday, July 8, 2009

Wages decision a ‘kick in the guts’ for the most vulnerable workers

above: Sharan Burrow - employer claims "nonsense and insulting"...

The other day – on July 7th – the final act of Australia’s so-called ‘Fair Pay Commission has left a bitter aftertaste for many.

The Commission has decided not to raise the minimum wage rate above its current level of just under $544 a week (an hourly rate at $14.31) : with a consequence that – with inflation – the value of wages has fallen in real terms.

According to the ACTU, “the average award worker will lose about $16 a week until the next wage decision is due in July 2010.”

ABC News has reported that “around 1.3 million” will be affected, and that both unions and the government were “disappointed”.

Employers had argued that a “$3-a-week increase in disposable incomes through… proposed tax cut[s]” would compensate workers for the wage freeze. ACTU President Sharan Burrow, responded by labelling such claims "nonsense and insulting" .

Continuing, Burrow argued that the shift would “certainly cost jobs if [we] see wage deflation in Australia.”

Burrow, here, is arguing on solid ground. Wage cuts which attack the disposable income of workers are bound to have a negative impact on aggregate demand and consumer confidence. This in turn would certainly cost jobs.

Meanwhile, Frank Quinlan of Catholic Services Australia's has identified the reasoning of the Fair Pay Commission as being inconsistent and hypocritical:

"On the one hand they have argued that when there is inflationary pressure, low paid workers wages need to be controlled," he said.

"On the other hand they have argued that when there is recessionary pressure, low paid workers wages need to be controlled.

"So it is very difficult for me to understand the circumstances under which this Fair Pay Commission would actually deem it fair to increase low paid workers wages."

Australia’s most vulnerable workers ought not be made to ‘bear the burden’ in responding to the recession. Here we refer to cleaners, child care workers, retail workers, hospitality workers, call centre workers and others.

Arguments for suppressing these peoples wages are just another take on the discredited idea that labour markets ought always be flexible downwards in order to ‘clear’.

While wages here are frozen, ACTU Secretary Jeff Lawrence has indicated that:

“The costs of rent, food, medicines, education and utilities have all risen in the past year and families need a pay rise to keep up."

Unions will be hoping that the new “Fair Work Australia” body will restore some measure of wage justice when it rules on minimum wages in 2010.

A ‘wait and hope for the best’ approach, though, is not sufficient in times such as these. Not only do unions need to campaign in earnest for a restoration in real wages: the times also demand immediate action from the government to support the disadvantaged.

In the interim period between now and the next decision on minimum wages, the Federal Government ought again provide stimulus in the form of cash supplements: only this time for the most vulnerable workers.

Such stimulus ought compensate these workers in full for the real wage losses that are flowing from this final act of bastardry by the Howard-era ‘Fair Work Commission’..

But for workers there remains the need to work – in some ways – independently of the Government.

Under pressure as a consequence of anti-union populism – beat up for years by the conservatives and their allies in the business establishment – Labor has failed to provide for the right of workers to withdraw their labour except under the strictest of conditions.

There is no recognised right for pattern bargaining: and there is no recognised right for political strike action. Further, from the Hawke era, there is no right to ‘secondary boycott’ industrial action in solidarity with workers who may not be as organised or positioned to enjoy bargaining power or leverage in their own right.

If the Australian Labor Party (especially the Federal Government) continually fails to respond sufficiently to the labour movement mobilisation that led to the defeat of the Howard regime, then clearly workers and their representatives need to ‘keep their options open’. If this means support for the Greens, and other progressive political forces who are less equivocal in their support for worker’s rights,then at least these might provide pressure on a Labor Party which takes the support of workers for granted.

But if Labor values its relationship with the union movement, immediate stimulus payments to compensate the 1.3 million who are suffering as a consequence of this cut in real wages – are a very good way to start. Such measures could further be enhanced by a restructuring of the broader tax system in favour of low-paid workers.

On these issues, the ACTU and organised labour more broadly, need to remain on the front foot. Workers must organise in the immediate term for compensation in regard to this cut in real wages. And over the longer-term we must all stand up for a rise in the real wages of vulnerable workers – not only as tied to productivity – but as a matter of distributive justice.

Tristan Ewins,

July 8th 2009

nb: Leonie at "En Passant" also discusses the issue of wage justice. You can find it here:


  1. Tristan

    It's interesting that the labour share of the national product even before this wage cutting decision was handed down is at its lowest in over 40 years. The profit share is at its highest ever. And yet the crisis sees capital respond with more and more (successful) demands for wage cuts.
    The problem is not that wages are too high but that the profit system - the way production is organised - is inherently crisis ridden, and the decline in profitability produces a response from the capitalist class - to drive our living standards down and thus to restore profit rates.

    Labor and a the ACTU have been willing partners in this through the Accord and then the destruction of any rank and file control over or even input into unions, and the rejection of industrial action the way to defend jobs and wages.

    I don't see supporting the Greens or other leftwing political alternatives a solution. Lindsay tanner losing his seat won’t change Labor's approach. In fact Tanner is one of the cheerleaders for capital in the ALP.

    I do however see demonstrations and strikes to defend jobs and win wage increases as the way forward. The political response can then flow from that, not pre-empt it.

  2. I forgot to mention there is an article on this topic on my blog En Passant called Cut profits, not wages. (See

  3. I must be honest with you first up that my own pay sucks, big time. My 2007 - 08 pay was CONSIDERABLY under $40,000. But this decision was never going to affect my pay rates, unlike actions from the state government which will have serious financial repercussions on my income as I am a Cr working part time for a MP

    But, who exactly are the characters on this fair pay commission. two professorial academics who would not know the real world and how hard people scrimp and save when they get peanuts for long hours of work, characters who know many a paper cut but never a blister

    And three upper class, well off characters who similarly have no idea of suffering, struggle, poverty.

    I do because I have gone and found shopping trolleys to get the coins out. Embarassing yes, but the point is that I understand how tough things can be for many within our society

    But this fair pay commission has no one who has ever been dirt poor. It has no one who has lived on the minimum wage. It has no community representatives. So then what good is it to the community?

    Unless we do have community reps in some tangible numbers on boards of all sorts then we are paying lip service to democracy. And guess what - a guy named Nixon, who once had a job in a big white house, believed that in any group of influential people one third must be community representatives so at least they can be heard and thus have a chance to convince others to vote their way

    This decision that granted zip to the lowest paid of the low proves that we need the same policies here. But you would never ever get such policies from teh Liberals. Remember when Jeff got in and sacked all the community reps on hispital boards? Appointed bankers instead, you know, people who "care".

    Ange Kenos

  4. Thanks Ange.

    I am not sure community representatives would make that much of a difference. Nixon I think proves the point. It can become a trap in which the decision seemingly becomes the community's as well.

    My memory is wage fixing boards used to have ex-unionists on them, but that didn't work.

    I see the unions are now pushing for wage increases for other low paid workers through state commissions. This would cover that small group who work for unincorporated associations and the like.

    So it won't help the 1.3 million low paid covered by the Federal jurisdiction who got nothing from Harper's Orwellian Fair Pay Commission.

    I think the union movment leadership is running out of options. Advertising campaigns, industrial commissions and the like are proving useless. Eventually the membership may force them to turn to industrial action.

    I was going to say they were caught in a pincer movement between the bosses and their members but it is not clear to me there is any ground swell among members for unions to do anything. We shall see.

  5. This is a great post Dmitry. I just had one of the ‘Doh!’ moments and ran back to correct my own site before publishing my comment. You see my own comment form did not match what I’m about to advise. I get less comments than you, so never noticed any problem. I’ve changed it now anyway so here goes.

    part time worker


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