IRC decrees another pay cut

April 24, 1991

By Peter Boyle

Nobody could accuse the ACTU leadership of strategic genius. They locked themselves into the Labor government's rigged wages system right through the boom of the '80s, systematically opposing any attempt to pursue claims outside the system while workers were in a comparatively strong position. Now, in the midst of a deep recession and serious unemployment, the peak union body finally rejects a decision of the Industrial Relations Commission and opts for collective bargaining.

Of course, the decision to oppose the IRC was not really the ACTU's. It was forced on the union movement by the April 26 national wage case ruling, which imposed another cut in real (inflation adjusted) wages after 18 months in which wages were not adjusted at all. The previous national wage adjustment was in November 1989.

The IRC decided to allow a wage rise of 2.5% if and when employees can prove to the commission that they have carried out productivity bargaining (more trade-offs) and provided they renounce any further claims during the year.

According to the Labor government and the ACTU, this wage case was supposed to compensate workers for the loss in spending power due to inflation. But inflation since November 1989 adds up to 9.6%! And some workers have yet to receive the 1989 wage increase because they are not unionised or their unions haven't been able to strike a deal with their employers over trade-offs.

Over the past seven years, the Hawke Labor government's Accord with the union movement has delivered the biggest wage cuts in any OECD country. According to a recent study by Macquarie University economist Marc Lombard, the Accord and other Labor policies have doubled the gap between rich and poor in Australia.

While the latest decision delivers an Accord-style wage cut, it does so by rejecting every provision of the Accord Mark VI deal struck between the ACTU and the Hawke government in February 1990.

Accord Mark VI was stitched together behind closed doors by ACTU secretary Bill Kelty and Treasurer Paul Keating just before the last federal elections. It promised:

  • a 1.5% award wage increase in September 1990;

  • a $12 wage increase in April 1991;

  • an additional "over-award" payment to be negotiated through enterprise bargaining;

  • a 3% increase in employer contributions to superannuation funds.

The ACTU officials claimed that this package would deliver the equivalent of some 7% in extra disposable income to workers. This was that rewarded workers for having sacrificed most in the interests of the national economy, said ACTU president Martin Ferguson.

However this 7% was always a shonky figure, because many workers would not have the bargaining power to get any net gain out of enterprise bargaining — especially during a recession. Superannuation is still available only to a minority of workers.

The ACTU's promises to the union ranks become even more farcical when it agreed to sacrifice the first-tier wage increase of 1.5% in another decision from the top last November. The ranks were told to look forward to the April payment and the other provisions of Accord Mark VI.

Accord Mark VI was sold to workers as the pay-off for eight years of sacrifice for an economy that went bust anyway after the Bonds and Skases ripped off a fortune. Meanwhile, the ACTU and the government tried to sell it to big business as the best way to move to "enterprise bargaining" without conflict.

Now it seems most employers sense the approaching end of the Hawke government and the era of Accord politics. Many employers are striking enterprise bargains with non-union labour, or with individual unions, without the help of the ACTU. The IRC seems to have got the message, and therefore dumped Accord Mark VI.

Martin Ferguson attacked the commission for refusing to take up the challenge of enterprise bargaining. He was joined in this by the Hawke government and by the Liberal-National federal opposition. All are all now fervent supporters of enterprise bargaining, the centrepiece of the so-called New Right's strategy to destroy union power.

Paul Keating complained that the IRC was passing up a chance to move to a more "flexible labour market system" while workers' bargaining power was at its lowest thanks to "the recession we had to have".

Keating accused the IRC of taking its revenge for the government blocking a pay rise for commissioners last year. He noted that a deputy president of the IRC, on $132,000 per year, would get a $64/week rise under the 2.5% ruling.

But this is precisely why the IRC and the employers are confident that they can get away with the 2.5%. Higher paid workers, often those in the best bargaining position, would be better off than with an across-the-board $12 increase, while lower paid workers would be less likely to take serious industrial action now because of high unemployment.

Further, the union ranks are not likely to be stirred to action around an ACTU appeal to implement enterprise bargaining. And despite its protests, the Hawke government is not about to do anything to upset big business.

Big business signalled its support for the IRC decision through a rally on the stockmarket. As well, the Metal Trades Industry Association (which unites some of the biggest private employers), the Confederation of Australian Industry and New Right guru and former e all welcomed the decision.

Stone supported the ruling because it allowed only a 2.5% increase subject to stringent productivity bargaining award by award, and because it rejected ACTU-style enterprise bargaining which was "not true enterprise bargaining".

To the ACTU's dismay, big business is now recognising that it can get enterprise bargaining and a deregulated labour market without much more help from the union movement and the Accord. The post-Accord industrial landscape will probably look very much like that of New Zealand under the Bolger government — a full-scale attack on the award system itself.

Thanks to the Hawke government, the ACTU and nine years of Accord-enforced industrial peace, the union movement will face this threat with dwindling ranks and widespread demoralisation. In the current recession, a fight back is very unlikely without united union leadership committed to real wage justice.

Such an approach is not likely to come from the present crop of union officials.

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