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.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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