The federal government announced on March 30 that a wage subsidy package would go to parliament aimed at encouraging companies contemplating job cuts and stand-downs to retain and pay workers for the duration of the economic crisis triggered by the COVID-19 pandemic.
The Coalition had explicitly ruled out wage subsidy packages. But its turn-around has come after pressure from unions and employer groups. While the decision has been widely welcomed, the package is inadequate to meet the looming crisis. It has also come too late to help tens of thousands of workers already stood down.
The bailout is a wage subsidy to employers considering laying off workers. It has been set at $1500 a fortnight — 70% of the median wage — irrespective of how much was earned or how many hours worked.
The payments will be available for a maximum of six months: they begin on May 1 and will be backdated to March 30. They will cover workers dismissed between March 1 and March 31 at qualifying companies.
The subsidy will apply to all workers, including casuals, provided that the casual employee has been employed for at least 12 months.
However, the criteria for casual workers to qualify is still unclear, particularly if they have had breaks between jobs over the previous 12 months.
To qualify, a business with a turnover of less than $1 billion will have to have experienced a drop in revenue of 30% or more. Businesses with a turnover of more than $1 billion will have had to experience a reduction of more than 50%. Sole traders are included in the scheme.
While this wage package provides thousands of workers with some comfort, like the previous stimulus package it is inadequate.
First, payments to businesses begin far too late, which means that companies, particularly those with cash-flow problems, will sack or stand-down workers prior to May 1. This is why it should be brought forward.
Secondly, the wage guarantee amount is inadequate: it will leave thousands of working people facing financial oblivion.
Thirdly, all casual workers, irrespective of how long they have been working for a particular employer, should be eligible. It has been estimated that 1 million casual workers will not qualify. The fact someone is employed casually does not reduce their needs: indeed, their precariousness means they have less resources to survive this crisis.
Fourthly, the loss threshold for companies to qualify for the wage subsidy is too high. We do not know how long the pandemic will last. While some companies will qualify now, many will not and they will still be trying to survive with reduced revenues, meaning that thousands more will face stand downs and job cuts.
Responding to the new package, the Australian Council of Trade Unions (ACTU) has renewed its call for a wage subsidy for all workers, regardless of their contractual or employment relationship, citizenship, residency or visa status.
The ACTU argues the payment should be lifted to $1375 a week and modeled on the schemes introduced in Britain (80% of a worker’s wage) and Denmark (75% of a worker’s wage). (The Danish scheme is aimed at putting the economy, outside of essential services, into mothballs to slow the virus spread.)
ACTU secretary Sally McManus said: “The union movement has worked doggedly to make sure this government understands the grave situation Australian workers find themselves in. Less than three weeks ago, the Morrison government wouldn’t consider the notion of a wage subsidy.
“We now need employers to keep people employed and keep paying their wages. We are calling on all employers to do their part.
“We also want to see workers who have been let go re-employed.
“A wage subsidy program needs to have safeguards to ensure people are kept in employment and that any taxpayer money flows to the workers. The government has made clear that this is a wage subsidy and not a wage replacement program, and we would expect to see people maintain their wage levels during this program.”
This will be difficult. With so many companies standing workers down, the ability to mount workplace pressure is extremely limited. Where it is possible, however, pressure will be needed on management to maintain wages and employment.
Equally important is the need to maintain pressure on the federal government to boost wage subsidies and ban sackings.
It may feel impossible to shift the government further. But, given that in just three weeks it has moved from offering cash to small- and medium-sized businesses to a $137 billion wage subsidy for millions of workers, we can see that it is susceptible to pressure.
We can protect the livelihoods of working people and, post pandemic, look to transform society to put people before profits.