At 4%, unemployment in Australia is lower than it has been since 1974. Federal Treasurer Josh Frydenberg claims that the relatively low unemployment rate is a sign that “our economic plan is working”.
Yet wages are stagnating and the cost of living is rapidly rising. Inflation is at 3.5% a year and growing, and fuel prices and housing costs are straining people’s ability to make ends meet.
No wonder we’re uneasy about Prime Minister Scott Morrison's view that “our economy is unshaken”.
But the pain is not evenly shared. Company profits have skyrocketed during the pandemic. Australian Bureau of Statistics (ABS) figures show that company gross operating profits (profits before tax) rose by 13% just in the 12 months to December 2021. But over 2019–20, one third of Australia’s largest companies paid no tax at all.
Wages: supply and demand
High school economics teaches that if demand for a commodity (people’s ability to work) rises or stays steady but the supply of the commodity decreases (unemployment falls), the price of the commodity (wages) rises.
This does not describe what is happening to working peoples’ wages. Unemployment has fallen dramatically from 5.6% in March last year to 4% this March. Working people, as a commodity, became significantly scarcer over the past year.
And it’s only getting worse.
Alison Pennington, senior economist at the Australia Institute’s Centre for Future Work, said in The New Daily on March 30: “The [Federal] budget forecasts wage growth of 2.75 per cent in 2021–22, below inflation which is forecast to grow by 4.25 per cent. That’s a real wage cut of 1.5 per cent”.
Insecure work and productivity
Andrew McKellar, Chief Executive of the Australian Chamber of Commerce and Industry, claimed on ABC Radio National Breakfast on April 13 that the reason for stagnating wages is workers’ lack of flexibility and productivity, not the rise of insecure work.
“We’ve got to boost our productivity levels, which have been really weak for more than a decade now,” he said. “It’s easy to whip up some uncertainty and I think at the moment … one of the risks we’re seeing … is that there is this theme around insecure work,” McKellar blustered.
“That is a myth. That is a fiction. We’ve got to be careful about promoting those kinds of ideas that are just not based on facts.”
However, Jim Stanford, director of the Centre for Future Work, said labour productivity has been rising “by around 1% per year”. “There’s never a guarantee that productivity growth will automatically trickle down to the workers who produce it,” he said.
Millions of insecure workers
Academic Alexis Vassiley estimated that as many as 3 million workers are in insecure work. “An estimated 2.4 million — 20% to 25% of the total workforce — are casual workers, with no paid leave entitlements. A further 500,000 are on fixed-term contracts,” he wrote in The Conversation.
Insecure workers generally receive lower wages, have fewer rights at work and are in a far weaker bargaining position than those in secure work. Insecure work is a drag on all workers’ wages.
The Australian Council of Trade Unions (ACTU) said in The Rise of Insecure Work in Australia: “The vast number of insecure workers are always living on the edge and in fear of the boss who can send them packing without notice”.
“Loss of this precarious job will usually mean falling back into even deeper poverty and desperation. Because of such fears, even if in theory precarious workers have some limited protections under the existing laws, they are unlikely to take any action to defend themselves or enforce their rights.”
“Governments have wage-booting tools to deal with the higher cost of living,” Pennington argued. “Across the ditch, New Zealand just increased the minimum wage by 6 per cent, recognising its frontline lowest-paid workers have offered the most in the pandemic, and been hit the hardest.”
The minimum wage in Australia is set by the so-called Fair Work Commission. The federal Coalition government generally sits on its hands and refuses to make a recommendation for wage increases for the lowest paid. Last year, the minimum wage rose by 2.5%.
The ACTU is calling for the minimum wage to rise from $20.33 an hour to $21.35 — or $2000 more a year — a 5% pay rise.
Employer groups want to cap wage rises at 2–3%.
The Labor Party’s extensive policy platform mentions the minimum wage just once, and vaguely. “Labor supports a minimum wage that provides a living wage and will maintain or improve the relative living standards of low paid workers.”
The Australian Greens want the minimum wage to be set at 60% of the median wage “so no one earns below the poverty line”. Based on last year’s median weekly earnings for full-time employees, that translates to a new minimum wage of $23 an hour.
The Socialist Alliance is calling for a minimum wage of at least $25 an hour, or around $49,000 a year for a 38-hour week.
A significant rise in the minimum wage would place a floor beneath all wages and generally lead to a broader wage rise for those whose incomes are dependent on federal awards. The larger the rise of the minimum wage, the bigger the boost to the wages of all low-paid workers.
Government action and worker solidarity are key to overcoming the scourge of insecure work and ensuring pay rises keep pace with inflation and productivity improvements. Industrial organisation and action are also fundamental.
In New South Wales, the Rail, Tram and Bus Union (RTBU), the NSW Nurses and Midwives Association (NSWNMA) and the Teachers Federation are all campaigning for wage rises above the 2.5% wage cap imposed on public workers by the Coalition government since March 2011.
The RTBU is demanding a 3.5% pay rise, in addition to guarantees on staffing and job security. The NSWNMA has taken strike action for safe staffing ratios and for a “fair pay rise above 2.5%”. The NSW Teachers Federation is campaigning for a 7.5% pay rise in addition to 2 extra hours per week of planning time, to combat the worsening teacher shortage.
Other unions, public and private sector, and working people need to wholeheartedly support these unions’ attempts to break the NSW government’s wage cap. When we act together in solidarity, our power to achieve positive reforms is strengthened.
[Graham Matthews is a member of the United Services Union and the Socialist Alliance.]