The Broken Bargain- Australia Institute Webinar

14 July 2021

Sally McManus, ACTU Secretary looked at Australia’s growing wages crisis in a 1 hr webinar at 11am today. 

She told of how the Australian system of award wages had been world-leading with its concept of a ‘fair go’, and it had an outcome similar to the Nordic countries.  This has, however been in retreat since 1975 with the rise of neo-liberalism and trickle-down economics as the dominant political philosophies.

Perhaps the most amazing fact in the webinar was that the workers share of GDP in 1975 was a record high of 54%, but has declined by 10.4%, and this has gone to the corporate sector.  The amount in dollars is $200 billion a year. While wages growth in Australia has been generally below the CPI, wages recently actually overtook the CPI briefly.  However, as McManus points out the CPI is composed of discretionary goods, which tend to be imported and more luxury items, and necessities.  The discretionary component has not risen as fast as wages, but the necessities component has risen faster.  So the lower paid, who mainly spend on necessities have gone backwards relative to the most important component of their spending.  McManus estimates this at $20,000 per waged worker.

She identifies poor bargaining power as the cause of the change in the distribution of Australia’s wealth.  According to the RBA (Reserve Bank) temporary workers have kept wages down.  This is partly, but not wholly, workers on visas who are a group likely to be a whole sector vulnerable to wage theft.  But Labour Hire companies have also lowered wages and conditions as workers can simply not be offered any shifts. 

Visas have also been used to avoid training people. TAFEs have been run down and overseas workers’ skills have been used to save money on training.  This has improved short-term profits but deskilled the country- a bad strategy.  It has relied on foreign training. 

COVID has been used as excuse for the economy not doing well, but it has not led to a revival.  60% of new jobs since the last lockdown have been casual, and 57% are part-time.

Another Australia Institute IR expert, Jim Stanford, commented that Australia’s IR system was unique, but the changes since 2013 had severely limited the ability of workers to bargain.  Only restricted aspects could be discussed, and conditions could easily be traded away.  Even the ILO (International Labour Organisation) has commented on this.  The casualisation of the workforce has been facilitated and most recently this has been a significant factor in the spread of COVID.

The webinar will shortly be available at https://australiainstitute.org.au