Bill Shorten’s proposed two-part strategy for dealing with stagnant wages growth, outlined yesterday at the Press Club, has already elicited the now proforma cries of “war on business” but isn’t especially radical. Shorten proposed a pincer movement, if you like — an increase in the minimum wage closer to a “living wage”, and an end to an increasingly favoured tactic of employers — resolving industrial disputes by terminating enterprise agreements and letting workers fall back down to award “safety net” rates.
Remember that enterprise bargaining was introduced by the Keating government with the support of the ACTU, over a distinct lack of enthusiasm from the then-Industrial Relations Commission and employers. It was entirely consistent with neoliberal logic that said wages should not be made at a national level — as they were until then via the awards system — but decentralised so that employers and employees could negotiate wages and conditions at the workplace level, with awards staying as a safety net. IR hardliners wanted to take that logic all the way to individual agreements, happily ignoring that few workers had the bargaining power to negotiate fairly with even small employers — as bitter experience under Workchoices showed.
But the ability to terminate enterprise-level agreements so that workers simply fall back to usually much lower award rates gives employers a trump card in any industrial dispute — one they have been using with increasing enthusiasm in recent years. The irony is, employers are thus driving the IR system back to the kind of award-based centralised wage fixing we thought we’d abandoned in the 1990s. Right-wing pundits like Jennifer Hewett insist this is only because Labor’s Fair Work Act has made negotiation of enterprise-level agreements so arduous. In fact it reflects one of the truisms of Australian industrial relations — business will use any opportunity it can to drive down wages. We saw that under Workchoices. We’ve seen that persistently with wage underpayment by some of Australia’s biggest businesses, taking advantage of a lack of interest by industrial relations regulators in whether foreign students and 457 visa hires were being paid what they were supposed to be being paid. We’ve seen it in the widespread underpayment of superannuation by employers, relying on lax Tax Office enforcement. We’ve seen it in the insistence that, despite a massive surge in profits for Australian business, they don’t think it’s time to pay higher wages.
Shorten’s living wage proposal would return to the position long argued by the ACTU, that there should be a regular “living wage” case that addressed the minimum income that families actually needed. In effect it says to business, “if you want go back to the safety net, we’ll raise the net.”
Right on cue, economists and business emerged to insist any increase in the minimum wage would cost jobs — the longstanding argument from IR hardliners that the Productivity Commission struggled to find evidence for in its IR review commissioned by the Abbott government. But that argument is hard to sustain given business has refused to reward workers for productivity growth and profit increases in recent years — instead they’ve banked those benefits.
What good would an increase in the minimum wage do for the majority of Australian workers who aren’t on it? That’s where the government’s rhetoric on the minimum wage comes in. Last year it argued against any substantial rise in the minimum wage because it would in effect be wasted on women in middle-income households rather than going to the low-income workers. In the government’s view, a rise in the minimum wage would flow through not just to low-income households but to middle-income households and even some high-income households, because of household members working in minimum-wage jobs in addition to members working in higher-income jobs.
As it turns out, that’s a potent argument for using a higher minimum wage to break the wage growth drought and lift household incomes right across the economy, not just for our most poorly paid workers.
A lift in the minimum wage to a cost of living sustainable level would cost employers nothing as the extra income would be immediately spent in the economy and generate quick consumer spending growth that then translates into increased demand for business and increased profits generating more business tax tax payment, in fact a win for all, including the economically stupid turnbull government
While political parties and corporate bosses sit cosily on their wealthy laurels, I wait in vain (so far) for the millennials to become so angry they’ll flout the new laws against striking and other methods of protest. But the inequity in our society is becoming so great that its only a matter of time. As our grandfathers came to realise it is literally the only language those in power understand.
On the one hand Shorten does seem to be doing his job. On the other hand it is all very well to paraphrase the ills of the economy as they pertain to labour (or employees) but there has to be a definitive strategy to correct the state of affairs and, of course, the strategy needs to be rather robust. Ditto for the (so called) Integrity Commission(?); post-precedents to Orwell’s Ministry of Truth(?).
Let’s give the guy a go but I suggest that the Leader of the Opposition ought to have a fairly clear and comprehensive policy (which, inter alia, identifies, at some length, the need for the changes in the first place) by (say) the end of March.
As to the minimum wage the UK has stats that monitor the change in employment, for those affected, in respect of changes to the minimum wage. The simple-minded “supply & demand” analysis does reflect (and imply) a reduction of those employed as the minimum wage increases. The more complex considerations concern the implications of this arm-chair albeit orthodox view.
Nowhere, to the best of my knowledge, has either the demand or the supply curves for labour been plotted with empirical data; the equilibrium price of labour (of any kind) in any country or province or state within a country is unknown. The Mayor of Mount Isa (to pick a location at random) has no more of an idea of the equilibrium (aggregated) wage that has the Treasurer
or indeed anyone in the Treasury. In this respect the “analysis” from the point of view of supply and demand is rather an idealised fiction at best.
If minimum wages caused unemployment or job losses then those entering the work force from a given date would never find jobs (according to the above (cough) “theory”. However, in every economy more people are being employed over any interval of time. There is unemployment but except for the recession in 2008 in (e.g. the UK and the USA) the unemployment rate has been relatively constant and has NOT increased with the percentage of people who are eligible to enter the work force – at whatever skill level – (as would be observed if the theory was correct). Therefore, the argument that minimum wages causes unemployment is not creditable. Enough said – or does someone wish for more ?
trickle down economics has destroyed the U.S middle class and is well on the way to doing the same thing in the U.K and Scotland will leave Britain at the first opportunity as they know they are on a sinking ship.
shorten is on a winner and turdball knows it, you can fool some for some of the time but, is the old standby and very relevant here and now, the intelligent voters are awake to the coalition bullshit and will throw them out come polling day, have a look at the sports bet odds for labor that tells the story.
the more workers earn the more they spend, this increases demand for products and services which increases employment, more wage earners mean more demand and more personal and business tax receipts to the government and more GST revenue for the states which creates more infrastructure spending which creates more jobs and on it goes, thats a successful economy, the coalition economy of wage starvation means less spending less tax receipts less infrastructure and a recessive economy, always remember that the rich love recessions, they can buy shares,business, and property at bargain prices, they have the power to induce recessions and to revive an economy to sell their ill gotten recession acquired benefits at big profits, how many yanks lost their homes in the GFC to the benefit of the greedy rich after the crash recovery.