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Tag: Wages & Entitlements

  • The Irrelevance of Minimum Wages to Future Inflation (2024)

    The report, co-authored by Greg Jericho (Policy Director) and Jim Stanford (Director), finds that a minimum wage rise of between five and 10 per cent in the Fair Work’s Annual Wage Review, due in June, is needed to restore the real buying power of low-paid workers to pre-pandemic trends, but would not significantly affect headline inflation.

    Key findings of the report include:

    • Last year’s decision, which lifted the minimum wage by 8.65 per cent and other award wages by 5.75 per cent, offset some but not all of the effects of recent inflation on real earnings for low-wage workers.
    • At the same time, inflation fell by 3 full percentage points.
    • There has been no significant correlation between rises in the minimum wage and inflation since 1997.
    • Raising wages by 5 to 10 per cent this year would offset recent inflation and restore the pre-pandemic trend in real wages for award-covered workers.
    • Even if fully passed on by employers, higher award wages would have no significant impact on economy-wide prices.
    • A 10 per cent increase in award wages could be fully offset, with no impact on prices at all, by just a 2 per cent reduction in corporate profits – still leaving profits far above historical levels.

    “Australia’s lowest paid workers have been hardest hit by inflation since Covid. There is a moral imperative to restore quality of life for these Australians and this analysis shows that there is no credible economic reason to deny them,” Jericho said.

    “It’s vital the Fair Work Commission ensure that the minimum wage not only keeps up with inflation, but also grows gradually in real terms – as was the trend before the pandemic.

    The post The Irrelevance of Minimum Wages to Future Inflation appeared first on The Australia Institute's Centre for Future Work.

  • Aged care wage rise decision crucial for elderly Australians

    The Commission today announced rises between 2 and 13.5 per cent for aged care workers from July 2024.

    “Today’s decision is crucial to supporting safe and quality care for elderly Australians, and the sustainability of the aged care workforce,” said Dr Fiona Macdonald, Policy Director at the Australia Institute’s Centre for Future Work.

    “For too long, aged care work has been undervalued and low paid. The Fair Work Commission’s decision to award additional pay rises, on top of an interim 15 per cent wage rise, is vital to fixing this.

    “The introduction of a new classification structure will also provide the basis for the ongoing recognition and valuation of aged care work.

    “It’s essential the federal government commits to fully funding the additional increases of up to 13.5 per cent from the start of the next financial year.”

    “The exclusion of indirect care workers from today’s decision is a lost opportunity to support the lowest paid workers.”

    The post Aged care wage rise decision crucial for elderly Australians appeared first on The Australia Institute's Centre for Future Work.

  • On International Women’s Day: How the Fair Work Commission Can Really Take On the Gender Pay Gap

    This International Women’s Day, it is time to call on Australia’s workplace umpire, the Fair Work Commission, to finally close the gender pay gap.

    Half a century after the commission’s predecessor granted women “equal pay for equal work” in a landmark case in 1969, the gap remains between 12% and 21%.

    Amendments to the Fair Work Act by the incoming Labor government in 2022 gave it new tools to close the gap by addressing the undervaluation of work in traditionally female-dominated occupations.

    If it uses these tools to their full potential, 2024 will be a landmark year in the genuine achievement of equal pay for equal work.

    What we’ve been doing hasn’t much worked

    Traditionally in Australia, addressing gender-based undervaluation has relied on two approaches.

    The first has been to argue the business case for gender equality – convincing employers they’ll be rewarded for “doing the right thing”.

    The second has been to bring equal pay cases to tribunals.

    Unfortunately, neither approach has been successful. In particular, pushing for equal remuneration through tribunals has been time-consuming and expensive.

    These tribunals, historically working on models of male full-time wage earners, have struggled to understand the undervaluation of work performed predominantly by women.

    The commission’s new tools

    The commission’s act has been rewritten to require it “to promote job security and gender equality.”
    It also has the power to make equal remuneration orders either on its own initiative or on application in order to bring about equal pay for work of equal or comparable value.

    A further new development is the establishment of expert panels to assist in gender-related cases. Advice from gender experts should assist in overcoming historical gender biases in commission decisions.

    Perhaps the most promising tool is the change to the commission’s modern awards objective, which requires it to eliminate gender-based undervaluation of work and provide workplace conditions that facilitate women’s full economic participation each time it reviews an award.

    Among other things, this requirement is likely to result in provisions that ensure part-time work is treated equally to full-time work and ensure a better balance between work and caring responsibilities.

    Amending awards is likely to be particularly important for women given that almost three in five of the workers on awards are women. Men are mainly on negotiated agreements.

    If the commission wanted to, it could hold a wide-ranging inquiry into the many factors that have contributed to gender-based undervaluation of women’s work.

    It could also review entire industries and occupations that are female-dominated, upgrading multiple awards at the same time. This would avoid lengthy and costly reviews of individual awards.

    What’s likely in 2024

    The Fair Work Commission’s resolve to make lasting change will be tested by several matters currently before it.

    The commission is due to issue its final decision in the case lodged by the Australian Nursing and Midwifery Federation, the Health Services Union, and the United Workers Union on the value of the work done by workers in aged care.

    An initial interim decision delivered in 2022 awarded some – but not all – of these workers a 15% increase, finding that work in feminised industries had been historically undervalued and the reason for that undervaluation is likely to be gender-based”.

    Workplace Relations Minister Tony Burke backed the decision, saying it was merely the “first step”.

    Another application, for nurses and midwives outside of aged care, was lodged by the Australian Nursing and Midwifery Federation in February this year.

    The commission has already started the process of grappling with gender-based undervaluation in modern awards, commissioning research that documents the segregation of women and men into different occupations and industries.

    Further research documenting the history of a select group of female-dominated modern awards and identifying the extent to which common elements indicate gender-based undervaluation, is due to be released in April.

    It will feed into the annual wage review due by the middle of the year.

    How to be bold

    Gender-based undervaluation of women’s work won’t be eradicated by incremental adjustments.

    Here are three bold steps the commission could take:

    • grant a minimum interim 12% increase (one estimate of Australia’s national gender pay gap) across the board for female-dominated awards in this year’s annual wage review
    • develop new systems for classifying work and ascribing work value, breaking with the previous standards built around skills and qualifications in male dominated occupations
    • better consider the uneven bargaining power in industries such as nursing where governments fund care work and try to restrain costs.

    The changes to the Fair Work Act that allow multi-employer bargaining are a start, but unlikely alone to correct the undervaluation of women’s work.

    In female-dominated industries where collective bargaining is non-existent or ineffective, the commission should step in and further increase wages.

    The Fair Work Commission has been given the tools. This should be the year it applies them.

    The post On International Women’s Day: How the Fair Work Commission Can Really Take On the Gender Pay Gap appeared first on The Australia Institute's Centre for Future Work.

  • Women and work: still not equal

    International Women’s Day analysis of persistent gender pay gaps.

  • Fels Review Confirms Corporate Practices As Key Drivers of Inflation

    Key points:

    • The Australia Institute and its Centre for Future Work, which were among the first to identify the role of record-high corporate profits in driving the acceleration of inflation after the COVID lockdowns, made a major submission to the Fels inquiry and appeared before its public hearing in Melbourne in September 2023
    • A 2023 Centre for Future Work report showed that over two-thirds of excess economy-wide inflation (above the RBA’s 2.5% target) from end-2019 through the September quarter of 2022 was attributable to higher unit corporate profits.
    • Australia Institute reports documented that the rise in profits was strongest in industries with concentrated or strategic power in the broader economy: including mining and energy, manufacturing, construction and wholesale trade.

    “Prof Fels’ careful review confirms that price-setting strategies by corporations, including many obviously unfair and exploitative practices, have contributed significantly to the cost-of-living crisis afflicting Australian households,” said Greg Jericho, Chief Economist for the Australia Institute.

    “Since the current inflationary cycle began after COVID lockdowns, there has been too much attention on wages, labour costs, and consumer spending as the supposed drivers of higher prices. The RBA and other policy-makers have been too slow to acknowledge the role of profit and greed in pushing up prices.

    “This inquiry marshals abundant evidence from official statistical agencies, international economic organisations, think tanks and academic research to show that corporations have taken advantage of the pandemic and its aftermath to exploit consumers and drive up inflation.

    “Prof Fels’ report contributes to a more accurate understanding of what is causing the cost-of-living crisis, and a more balanced and fair strategy for solving it.”

    “Australian corporate profits have moderated in the last year, as supply chains were repaired and energy prices retreated. This has been crucial to the partial slowdown in inflation experienced in the same time.

    “But further reductions in prices for many essential goods and services are required to fully repair living standards, and Prof Fels’ recommendations for more exposure of excess prices and stronger competition measures to reduce them would help a lot.”

    The post Fels’ Review Confirms Corporate Practices As Key Drivers of Inflation appeared first on The Australia Institute's Centre for Future Work.

  • We Cannot Truly Value Care Until Workers Using Digital Labour Platforms Get Fair Pay and Conditions

    Australia risks returning to the days when the value of a female care worker’s effort and their working conditions were largely determined in private, informal relationships out of sight and out of the scope of regulation that protects most other workers.

    For most of the 20th Century, women workers providing care and assistance to people in private residences were explicitly excluded from the industrial relations system that ensured rights and standards, including minimum wages and employment conditions, for 90 per cent of Australian workers.

    Homecare and other social and community services workers were only recognised as workers at the end of the century, after long and enormously difficult struggles by women and their unions.

    Finally, in the 1990s, for the first time, care and support workers gained regulated minimum standards of pay and conditions. Previously, as unregulated workers, they had extremely low pay rates and some of the worst working conditions in Australia.

    Fast forward thirty years to 2024. The care and support workforce is still highly feminised. It is large and it is growing 3 times faster than other sectors in the Australian economy. Most care and support jobs are still relatively low-paid and insecure.

    Today, however, the need for fair pay, better quality jobs, and career paths for care and support workers has the attention of government and other policy makers. In the wake of the pandemic there is greater appreciation of how the quality of these jobs impacts on the quality of care and support for the aged and people with disability.

    And it is very clear that, if we are to successfully tackle Australia’s gender pay gap and women’s economic inequality, we must ensure better pay and career pathways for care and support workers.

    But now, digital or ‘gig’ labour platforms are undermining the slow progress that has been made towards proper recognition and valuing of care work. This is because most platforms, through which aged care and disability support workers connect with people requiring care and support, insist that workers are independent contractors.

    Platforms compete in the NDIS and aged care markets by using independent contractors to provide cheaper services, while other service providers directly employ workers. Platforms profit from avoiding the costs of employment, including superannuation, training and supervision. Platform workers have no minimum employment standards.

    Digital platform care and support workers have a lot in common with previous care and domestic workers who, for most of the 20th Century, were invisible and isolated, and struggled to have their labour recognised as work.

    Platform workers are without any rights to minimum rates of pay, working time standards, superannuation or other benefits and protections they would have as employees. They mostly perform their labour without peer support, organisational supervision and training, and they are cut off from opportunities for development and promotion.

    Opponents of employment standards for platform care and support workers don’t see it like this. They argue standards are not needed as workers are “entrepreneurs” who set their own rates, earn more than employees, enjoy the flexibility of working when and where they want, and are doing this work as a “side hustle” on top of more substantial jobs.

    None of this is true of the majority of care and support workers on platforms. Most (70 per cent) believe they are employees of the platform, even though they’re not. Even the platforms’ own data shows that workers from groups likely to be vulnerable to exploitation – migrants and younger workers – are over-represented on platforms. Many workers are paid below the relevant award minimum pay rate.

    It makes little sense to refer to jobs as side hustles when 4 out of 5 home and community-based care and support jobs (on and off platforms) are part-time, often short-hours jobs.

    Just because jobs are part-time, or a worker holds multiple jobs, doesn’t mean fair pay and working conditions don’t matter.

    For decades, women had to put up with undervalued work while employers, economists and public policy makers argued women worked in care jobs for love rather than money, and their earnings were not essential income. Present-day arguments opposing minimum standards are a little different, however, they would achieve the same end, perpetuating undervaluation and gender inequality.

    The post We Cannot Truly Value ‘Care’ Until Workers Using Digital Labour Platforms Get Fair Pay and Conditions appeared first on The Australia Institute's Centre for Future Work.

  • Paying for Collective Bargaining

    New provisions contained in both the Secure Jobs Better Pay (2022) and Closing Loopholes (2023) legislation will expand the scope for collective bargaining (including more opportunities for bargaining at a multi-employer level), make it harder for employers to evade collective bargaining, and empower union delegates to fulfil their responsibilities in workplaces to administer and enforce collective agreements.

    However, one important challenge for Australia’s collective bargaining system, that has not been addressed by these reforms, is how to pay for collective bargaining. The infrastructure of representation, bargaining, implementation and enforcement requires ongoing commitment of people and resources, from both the union and the employer sides of the relationship.

    In Australia at present, the workers’ side of this infrastructure is dependent on voluntary union dues contributed by individuals who choose to join a union in their industry. No collective system of union security or dues collection (such as closed or agency shop arrangements, dues preferences, or bargaining fees) are presently allowed under Australian law. Moreover, Australian law fully protects the ability of individual workers to ‘free ride’ on the benefits and protections negotiated by unions in their workplace: every provision of a collective agreement must be provided to all workers in a defined bargaining unit (whether they are members of the union that negotiated them or not). From a perspective of narrow self-interest, this system discourages union membership — and in turn starves the collective bargaining system of the resources it needs to be viable.

    In this article published in The Conversation, Centre for Future Work Director Jim Stanford discusses the nature of this ‘free rider problem,’ and highlights how the treatment of this problem varies wildly between business and union applications. Legal contracts which enforce collective revenue solutions to free-rider problems are common and fully acceptable in many common applications: such as residential strata arrangements, the governance of joint stock corporations, and even government tax collections. Where unions are concerned, however, the law prevents workers from making and enforcing a collective decision to jointly fund the apparatus of collective bargaining, to the shared detriment of workers who consequently cannot exercise collective bargaining power to improve their employment relationship. The rhetoric of ‘individual choice’ is applied selectively to industrial relations; no owner of a strata unit, or shareholder in a corporation, has the ‘free choice’ to refuse to pay the normal costs and obligations associated with those arrangements.

    Australia’s restrictions on union security and collective dues arrangements are uniquely restrictive among industrial countries; they are similar to the rules in so-called ‘right-to-work’ states in the U.S., where union representation has fallen to the low single digits. Free riding has been an important factor in the long-term erosion of union density in Australia: most recent data indicates that just 12.5% of employees in Australia are presently union members. Workers with greater awareness of the importance of collective bargaining to their long-term prosperity will support their unions, even though they are legally entitled to all the benefits of a collective agreement whether they join or not. But the current laws discourage this act of collective solidarity, and collective bargaining has been eroding accordingly. At present just 15% of workers in Australia are covered by an active enterprise agreement (and less than 10% in the private sector). The erosion of collective bargaining has contributed to wage stagnation, growing inequality, and job insecurity.

    Dr Stanford’s Conversation article has been selected for inclusion in the new anthology, 2023: A Year of Consequence, published by Thames & Hudson, and edited by Justin Bergman (International Editor of The Conversation). The book contains several essays published by The Conversation in 2023 that are judged to have contributed most to public policy dialogue in Australia over the past year.

    Further information on the extent and consequences of free riding in Australian collective bargaining, and five different strategies for addressing this problem (based on the variety of policies implemented in other industrial countries where collective bargaining is better-resourced, and hence stronger and more effective), are provided in Dr Stanford’s recent scholarly article in Labour and Industry, titled “International approaches to solving the ‘free rider’ problem in industrial relations.” Click below to see the full article.

    The post Paying for Collective Bargaining appeared first on The Australia Institute's Centre for Future Work.

  • After two years of profit-led inflation, workers deserve the pay rises they are getting

    The latest wage growth figures showed that workers’ wages for the past six months have grown faster than inflation. As Labour Market Policy Director, Greg Jericho writes in his Guardian Australia column, this should be celebrated. We need to shed our fear of wage rises. For too long any sign of increasing wage growth has been viewed as something to be stomped on while ever-increasing corporate profits have been cheered.

    Since the start of the pandemic, workers’ purchasing power has crashed, and the only way to recover the lost real wages is through wages increasing faster than inflation.

    The 1.4% growth of private-sector wages in the September quarter was driven largely off the back of the Fair Work Commission’s decision to increase Award wages by 5.75% and the decision to give aged-care workers a 15% pay rise.

    As a result around 40% of those who gained a pay rise in the September quarter received one greater than 4%.

    One other pleasing sign has been the relaxation of public sector wage caps has allowed those workers around the country to get a fairer pay rise, but their increases remain well below that of the private-sector.

    The profit-led inflation since 2021 hurt workers, and it now is only fair that they receive some recompense. After a decade of ever falling wage growth and a pandemic and recover that smashed real wages, it is very good news that workers are finally getting their fair reward.

    The post After two years of profit-led inflation, workers deserve the pay rises they are getting appeared first on The Australia Institute's Centre for Future Work.

  • Wages, employment and power: Call for conference papers

    The Centre for Future Work is hosting a stream at the upcoming AIRAANZ Conference.

    Join us as we continue the AIRAANZ and the Centre for Future Work traditions of bringing researchers and activists together to debate important issues in the world of work and industrial relations.

    The AIRAANZ (Association of Industrial Relations Academics of Australia and New Zealand) 2024 Conference will be held in Perth from the 31 January to 2 February 2024.

    Wages, employment and power
    Papers are sought on topics that relate to issues concerning employment, power and/or wages.

    Topics could include, but are not limited to:

    • the relationship between power and wages at the firm, industry or national level;
    • legislative reforms affecting wages, employment or power;
    • bargaining strategies to boost power and wages;
    • explanations for changing worker power;
    • job vacancies, labour shortages and wages;
    • the gendering of wages, employment or power;
    • employment, unemployment or participation amongst particular groups or industries;
    • product or labour market competition and worker power;
    • the effects of norms and institutions in labour markets;
    • the geography of power or wages;
    • the ideologies and strategies of employers, unions or the state.

    Submit your abstract to the conference organisers by 29th September.

    Feel free to get in touch with us if you have any questions about topics or the stream or would like any additional information.

    David Peetz d.peetz@griffith.edu.au, davidp@australiainstitute.org.au, +61 466 166 198 or +64 204 127 6749
    Fiona Macdonald fiona@australiainstitute.org.a, +61 437 301 065

    Abstracts must be submitted to the conference organisers via: https://consol.eventsair.com/airaanz-2024/submission-site/Site/Register.

    For AIRAANZ 2024 Conference details see: https://www.airaanz.org/conference/reimagining-industrial-relations-airaanz-2024-conference-31-jan-2-feb-2024/

    The post ‘Wages, employment and power’: Call for conference papers appeared first on The Australia Institute's Centre for Future Work.

  • For most workers, wages are still failing to keep up with inflation

    The best news from the June quarter wage price index is that average wages rose 0.8% – the same as inflation. This means that after 11 consecutive quarters, real wages have finally stopped falling.

    That is the good news, but as Policy Director, Greg Jericho noted in his Guardian Australia column, for most workers real-wages kept falling. Only good wage growth in construction, mining, transport and warehousing, and the utility industries enabled the overall growth to be equal with inflation. For workers in all other industries, real wages kept falling.

    And for all workers, real wages in the past year have fallen sharply and are around 5.4% below where they were before the pandemic.

    These latest figures only serve to reinforce that wages are not driving inflation and there is no sign at all of a wages breakout. Indeed, annual wage growth fell in the June quarter to 3.6% from 3.7%.

    It highlights that we do not need unemployment to rise to 4.5% in order for inflation to get under the RBA’s 3% target ceiling. The current rate is more than consistent with long-term inflation of between 2% and 3%. Any further efforts to raise unemployment by increased interest rates would only hurt workers and households for no benefit.

    The post For most workers, wages are still failing to keep up with inflation appeared first on The Australia Institute's Centre for Future Work.