Finance Work Government’s own department confirms the depth of wages crisis

Government’s own department confirms the depth of wages crisis

Around 110,000 workers at Woolworths negotiated a new enterprise agreement, but with "non-quantifiable" increases. Photo: supplied
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The government’s own figures have confirmed the depth of Australia’s wage-growth crisis.

Figures from the federal Attorney-General’s office have confirmed that average annual wage increases in more than 1300 newly approved enterprise agreements (EAs) fell in the March quarter to 2.7 per cent – down from 2.8 per cent in the December quarter.

Wages negotiated in private sector EAs fell from 3 per cent in December to 2.9 in March, while those in the public sector fared worse, tumbling from 2.7 per cent to 2.4 per cent in the March quarter.

According to the Australia Bureau of Statistics, wages in Australia have been growing at an annual rate of 2.3 per cent for the past three quarters.

Given that EAs, including federal and state, cover around 38 per cent of all Australian workers, the 2.9 and 2.4 per cent rises agreed within EAs appear comparatively good.

But chief economist at the Centre for Future work Dr Jim Stanford said the Attorney-General’s report confirms that the wage slowdown in Australia is getting worse, not better.

“It’s still better to have an enterprise agreement than not have one, but the rate of increase in new EAs is still falling,” Dr Stanford said.

“That’s another sign that the wage crisis is not fixing itself. In fact it’s getting a lot worse.”

Wages need to be growing by around 3.5 per cent a year for the Reserve Bank to reach its inflation target of 2 to 3 per cent, he said.

Dr Stanford said the gap between wage increases in the public and private sectors has continued to grow, as the wage caps imposed by governments in many jurisdictions (including the Commonwealth which has a 2 per cent cap) continued to spur wage stagnation in Australia.

“Public-sector wages in newly approved agreements are now growing a full half-point slower than in the private sector.

“The [federal] government has set a cap on public sector wages, but they still want wage growth to be back at 3.5 per cent by 2021-22.

“That’s ridiculous when you have your foot on the wages of your own employees.”

Dr Stanford said two steps needed to boost wage growth were to increase the minimum wage and eliminate the cap on public sector wage bargaining.

The March quarter figures come in the same week that a landmark income report by Melbourne University revealed that household income in Australia had grown by a total of 3.47 per cent between 2009 and 2017, from $90,578 to $93,734.

Endorsement of union membership: ACTU

The Australian Council of Trade Unions (ACTU) said the figures were an endorsement of union membership.

The figures showed that EAs that had trade union involvement – 85 percent of agreements in the March quarter – saw average pay rises of 2.7 per cent. Those negotiated without any union representation delivered an average rise of 2.4 per cent.

ACTU secretary Sally McManus said the figures showed union membership was the “fastest way to increase your pay”.

“People working where unions have been involved in collective agreements are winning bigger pay rises than those without union representation,” Ms McManus said.

“It also shows that people working in the public sector are being unfairly disadvantaged by artificial caps that are placed on wage levels by governments who don’t want to pay their own workers fairly.”

Dr Stanford said while it was clear that workers were better off negotiating a wage rise as a union member, one element of the report confirmed there had been an erosion of union bargaining power.

He said almost half of all workers (45 per cent) covered by newly approved EAs in the March quarter had “non-quantifiable” wage increases in their agreements.

“What that means is their wage gains are not specified in the deal, but rather are tied to things like future increases in the minimum wage, or changes in award wages,” he said.

“That’s an unusually high proportion of workers whose EAs don’t directly specify a wage increase – the highest in years.”

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