wages economics Alan Krueger

For an election that he promised would be a “referendum on wages”, Bill Shorten had little to say on that topic for the first week and a half, preferring to make seemingly endless announcements to the worried well of Australia about how much more taxpayer money would be tipped into the bottomless well of health services.

Easter, however, did provide a suitable launch pad for the wages issue. The holiday used to be the battlefield for IR extremists: every year, right-wing economists, employer groups and restaurant owners would emerge at Easter to bemoan penalty rates, taking us along a Via Dolorosa of shuttered cafes and lost jobs because greedy workers didn’t understand we now had a “24/7 economy”. Since wage stagnation set in, and penalty rate cuts signally failed to create any additional jobs, the IR hardliners have fallen silent and been replaced by unions and Labor talking about workers missing out.

Labor has long since committed to restore the penalty rate cuts imposed by the Fair Work Commission, repeatedly introducing legislation to attempt just that. So far, however, that appears to be its primary commitment in relation to wages, beyond promising strong support for minimum wage increases in the annual government submission to the FWC (which, admittedly, would make a change from the sexist rubbish offered by the Coalition). Yesterday, it committed to lift the income threshold for the Temporary Skilled Migration category (the rebadged 457 visa) to $65,000, making it harder for employers to use low-paid temporary foreign workers instead of Australians (cue, inevitably, pearl-clutching from distraught employer groups). Today, it committed to establishing a process for casual workers to seek transition to permanent status.

Both are little more than window dressing and will do little to address wage stagnation. While business in general likes high immigration of working-age people to keep downward pressure on wages, 457 visas, or the 482 category that replaced them in a moment of panic by the Turnbull government, were never more than a minor issue. The number of 457 visa holders in Australia dropped below 100,000 several years ago and the numbers have continued falling; the new 482 category has seen them fall to 83,000 in 2018, or just over half of 1% of a 12.7 million-strong workforce. The largest categories are now professional services providers and IT professionals, neither of which are particularly low paid. The bigger problem is the exploitation of foreign students, who number around 500,000 and who represent an easily abused pool of labour for unscrupulous employers, particularly in retail. But it’s a matter of bipartisan dogma that nothing should endanger our valuable higher education “exports”, despite what even business admits is an “epidemic” of wage theft that targets workers with poor English skills and no familiarity with Australian law. 

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As for casual workers, Labor is only proposing to allow workers to go to the FWC if an employer knocks back their request to shift from casual to permanent after a year. The request can still be rejected by the FWC. The ACTU will love it because it addresses an issue of almost obsessive focus for that body, what it claims is the growing casualisation of the workforce. In fact, there’s virtually no evidence that “casualisation”, which means different things to different people, has been getting worse in the last two decades. If anything, it might be falling (for their part, employers insist workers revel in the freedom and flexibility that casualisation, contracts and gig economy-style jobs provide, which is just as much rubbish as the ACTU’s insistence the whole economy is shifting to insecure work).

While it’s happy to offer such window-dressing, Labor has been reluctant to commit on measures that would make a real difference to the capacity of unions to drive better wage negotiation outcomes, like allowing a return to industry-wide bargaining or pattern bargaining, or ending the creeping growth on restrictions on the right of workers to take industrial action. We remain in a world where the idea of militant unions and workers aggressively pursuing pay rises via industrial action is economic heresy, or perhaps treason, even as workers can anticipate, according to the budget papers, nearly a full decade of sub-par wages growth. And Labor’s “referendum on wages” so far is a lot of talk and little in the way of substance.