Wage increases are not keeping up with productivity improvement and employers are taking a larger share of national income instead of paying workers more.

Three big issues are:

• The living standards of Australian workers have been falling under the Coalition Governments.
• National income has been going to profits and not to wages.
• The inequality between low- and high-income earners has been increasing.

In the entire eight years from the election of the Abbott government in 2013 to the end of 2021, private sector wages only increased 1.4% above inflation. In 2021 alone, wages rose just 2.3%, but inflation increased by 3.5%.  

Wage increases are not keeping up with productivity improvement and employers are taking a larger share of national income instead of paying workers more. This Centre for Future Work graphic shows the labour share fell just over 11 percentage points between 1975 and 2018 costing workers an average of $16,800 a year.

The fall in the wages share is fundamentally because of the loss in workers’ industrial bargaining power. Workers and unions are weaker because of:

• ‘Enterprise by enterprise’ bargaining.
• Successful efforts by employers to avoid unions and collective agreements.
• Legal changes which allow employers to get out of agreements and make it difficult for workers and unions to organise, bargain and take industrial action.
• More workers have been pushed on to minimum rates of awards while precarious work and increasing use of workers on temporary visas has made ‘wage theft’ almost standard practice.

Increasing wage inequality

On the most recent comparative information, wage inequality in Australia is the most extreme of the OECD countries. The top 10% of wage earners in Australia get 26 times more than the bottom 10%. 

Australia has the double whammy – all workers are doing badly because the total labour share of national income is falling and poorly paid workers are doing badly compared with the well paid. Widening inequality is occurring because of the very high ‘wage’ payments made to executives and managers which have spread from the private financial sector to the corporatised ‘public’ sector and to universities.

New policies are needed

1. Improved bargaining and wage-fixation

• Move to industry and occupational-wide bargaining.
• Remove all limits on bargaining claims and agendas and on taking industrial action.
• Make awards relevant to actual industry standards rather than as safety nets.
• The minimum wage to be set as a living wage.

2. Direct measures to reduce wage inequality

• Strengthen all gender pay equity measures and amend the Fair Work Act to empower the Fair Work Commission to make orders ensuring pay equity in awards and enterprise agreements.
• Require the FWC to use gender-inclusive methodology and criteria for job evaluation and classification schemes.
• Develop and apply measures equivalent to gender pay equity for NESB and less-abled workers.
• Legislate a mandatory ratio (initially at say 12:1) between the person with the highest and the person with the lowest earnings in an enterprise or organisation.

3. Action against wage theft

• A consistent system of investigation, wage recovery and enforcement, including criminal prosecution for perpetrators.
• Ensure unions have adequate powers to access and inspect employer records and take actions against employers.
• Better resource the Fair Work Ombudsman to ensure compliance with award pay rates.

 4. Measures to build and sustain collective organisations

• End the conservative assault on unions and support unions in legitimate industrial and political action and
• Explicit and effective protection for accredited union workplace representatives.
• A legislative code of rights and protections for workplace union representatives, including involvement in formal dialogue with management about investment, staffing and operation of the enterprise.
• Resource backing for union education and training for existing and prospective members and for innovative schemes to involve young workers, including students, in unions.

Conclusion

Little can be expected from the Coalition except further pain for workers.

The Greens currently have the most comprehensive and progressive policies on wages including a living wage and bargaining at whatever level is appropriate (workplace, firm, sector) and with the right to take industrial action unrestricted by bargaining periods.

The ALP is committed to wage theft laws, limits on sham contracting, and improving job security. They also advocate (as do The Greens) measures on the gender pay gap and ten days paid family and domestic-violence leave. At this stage they have no explicit policies on industry bargaining, right to strike or the living wage.

The Greens and ALP policies will lead to improvements for workers, especially the job security of the precarious workforce, preventing wage theft and reducing the gender pay gap. Union access to workplaces will be improved and this should make unionisation easier. 

However both parties need to do more about three other things: the structure of bargaining, reducing the inequality in earnings between the top and bottom of the workforce, and protecting union delegates and activists in the workplace. These are imperative and not add-ons. In particular, they require the ALP, and perhaps even some unions, to consider their strategic framework and priorities.

(This article is part of the SEARCH Activists Guide to the 2022 Election. You can download the entire guide by clicking here.)