News Election 2019 Wages and penalty rates: How an average worker stands to gain – or lose – after May 18
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Wages and penalty rates: How an average worker stands to gain – or lose – after May 18

gender pay gap
Crunching the numbers on wages: where the political parties stand and how much you stand to gain. Photo: Getty
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From John Howard’s “battlers” to Labor’s “working families”, the contest for average workers’ votes has always been fiercely contested.

But what is an average worker? And what are the major parties, the Greens and One Nation doing to help them?

Should the minimum wage be increased? And why is Labor suggesting taxpayers should directly pay for a wage rise for childcare workers?

It’s a new policy that Bill Shorten has confirmed could be expanded to other female-dominated industries to end the gender pay gap in Australia.

Is that a good idea? Or is it, as Education Minster Dan Tehan announced on Monday, “communism”?

How much is an average worker really paid?

Average earnings are often used to explain what passes for an “average” wage in Australia.

But that figure can be misleading. The average full-time wage in Australia is $90,300.

If that sounds a little on the high side to you, you’re on the money.

As the Grattan Institute recently argued, the majority of workers – 75 per cent – earn less than that.

It argues the typical Australian worker earns $57,918.

Many Australians also work part-time.

But the problem is even more complex than it first appears.

As Mr Shorten argued on Monday night during the first leaders debate, one million Australians are also under-employed and looking for more hours.

When you take into consideration seniors and retirees and people who don’t work, the typical adult’s income is only $36,893, according to the Australian Bureau of Statistics.

Many workers say they could only dream of having a wage as high as the supposed average of $90,300.

Debbie Muscat with her daughter and grandson.

For Debbie Muscat, one income isn’t enough to keep up with the growing cost of living.

”All the bills keep going up, but my wages certainly have not,” the Queensland grandmother said.

If you’ve ever wondered how your income compares to other Australian workers, economist Matt Cowgill has also prepared this calculator on his blog. It’s a bit tricky as it asks for after-tax income but it does help explain where you sit compared to other workers.

What does the Reserve Bank, unions and business say?

Before we get to the politicians, let’s take a look at what the Reserve Bank of Australia has to say about wages.

As it turns out, even the hardheads at the RBA argue low wage growth in Australia is a problem.

Last year, RBA governor Philip Lowe said stagnant wages was tearing a sense of shared prosperity and damaging social cohesion.

“Flat real wages are diminishing our sense of shared prosperity,” Mr Lowe said.

Reserve Bank of Australia
RBA says that wage growth is an issue in Australia. Photo: AAP

“The lack of real wage growth is one of the reasons why some in our community question whether they are benefitting from our economic success.”

He argued that between 1995 and 2012 workers’ average real wages increased by almost 2 per cent per year.

“It is also making it harder to implement needed economic reform,” Mr Lowe said.

The Australian Council of Trade Unions wants the minimum wage to increase to $762.20 a week, up from $719.20.

Over two years it would represent a 10 per cent increase.

“No full-time worker should live in poverty,” ACTU secretary Sally McManus said.

But Finance Minister Mathias Cormann has warned Mr Shorten’s push for a “substantial increase” to the minimum wage will push workers onto the dole.

What does Bill Shorten say on penalty rates and wages?

Mr Shorten has declared the 2019 election a referendum on wages.

Labor has vowed to legislate to reverse penalty rate cuts in the first 100 days if elected. So what is the problem they are trying to address?

Two years ago, the independent industrial umpire Fair Work Commission brought down changes to penalty rates. For example, Sunday hospitality pay rates were cut from 175 per cent of their standard wage to 150 per cent. On public holidays the penalty rate fell from 250 per cent to 225 per cent.

That’s why Labor now claims some workers could be left up to $26,000 worse off under the current regime if Mr Morrison is re-elected.

That figure is based on estimating the maximum impact of cutting penalty rates over the next three-year term of the federal government.

Bill Shorten with Tanya Plibersek, Linda Burney and Senator Penny Wong after launching Labor’s policy to lift the equality of Australian women. Photo: AAP

And while that’s at the extreme end – the ALP claims pharmacy workers could be left up to $26,000 worse off – there’s plenty of workers who are concerned about the impact of penalty rates.

The ALP estimates that retail workers could lose up to $15,000 and a fast food worker could lose up to $10,000.

“Penalty rates are not a luxury – they help people put food on the table and petrol in the car. They can be the difference in paying the electricity bill, health costs or child care costs – all of which keep soaring under this government,” Mr Shorten said.

On the minimum wage, Labor wants a “real increase” and has proposed a two-step process to get there.

Mr Shorten had pledged to introduce a “living wage” to ensure that no full-time worker is living in poverty – a goal that unions estimate will require a $72.80-a-week increase to the minimum wage.

But Mr Shorten has provided no timeframe for the transition or even a proposed annual increase to the minimum wage – instead asking the Fair Work Commission to drive the process if he wins the election.

The Fair Work Commission has previously conceded that Australia’s minimum wage of $37,398 per annum – or less than $20 an hour – leaves many full-time workers in poverty.

What does Scott Morrison say on penalty rates?

Unions have campaigned for months on the fact that Mr Morrison voted against Labor’s plan to overturn penalty rate cuts eight times in Parliament.

But the PM argues it’s not that he is opposed to workers getting a pay rise, just that he believes the Fair Work Commission should be left to set penalty rates without government interference. As he points out, this is the system that Labor championed but when it doesn’t like the outcome of the independent umpire it is trying to change the rules.

Two years ago when Treasurer Mr Morrison denied that the government had got it wrong in not owning the commission’s decision on penalty rates.

“Well no, because it was Fair Work Commission’s decision,” Mr Morrison told Sky News.

“Bill Shorten’s saying that under a Labor government any decision made by the Fair Work Commission, which is independently set up to ensure certainty about how wage issues are determined in our economy, any decision the unions don’t like, he will reverse it. I mean that’s madness.

“I mean he should be abolishing the Fair Work Commission if that’s what he thinks is the way it should run.”

The Prime Minister argues that Labor’s plans to force big business to pay higher taxes will hurt jobs and stop people from being employed.

On the minimum wage, Mr Morrison warns Labor’s policy will force bosses to sack workers.

“He’s saying to coffee shop owners and small businesses around the country: ‘Sack someone’. That’s his policy – that people should be sacked,” Mr Morrison said.

Prime Minister Scott Morrison visits workers at Civmec shipbuilding facility at Henderson, WA. Photo: AAP

What does Pauline Hanson say on penalty rates?

One Nation leader Pauline Hanson once called for penalty rates to be scrapped “right across the board”.

She has moderated her position since than but she speaks from experience operating a small business.

The former fish and chip shop operator has spoken of tough decisions she has had to make, including working weekend shifts because she simply could not afford to pay staff.

The One Nation leader is the former owner of a fish and chip shop. Photo: AAP

“If you go into a fish and chip shop, I’d have to pay $34 an hour to employ someone, yet McDonald’s down the road, they can only pay $26 an hour. This is the enterprise bargaining agreements,” she told ABC’s Insiders.

“This is what the unions have negotiated. They are talking about looking after the battlers. It is a big furphy.

“I think if we looked at it, we might be able to increase employment by helping small business.

“Those employers, I know myself, if you can cut back a little bit there, give them a helping hand, more likely these small businesses will open on a weekend, possibly give more hours and employ more people.”

 So have penalty rate cuts created jobs?

Not according to small business or the left-leaning Australia Institute.

Last year, it found reduced Sunday and holiday penalty rates for retail and hospitality workers failed to ignite the boom in employment promised.

The report, Penalty Rates and Employment One Year Later, found total employment was unchanged.

In fact, full-time employment declined by 50,000 positions.

Recently, the Council of Small Business Australia chief executive Peter Strong told The Australian that the net impact of the phased-in cuts by the Fair Work Commission had been minimal because they had coincided with above-­inflation increases in the minimum wage.

“There’s no extra jobs on a Sunday,’’ he said. “There’s been no extra hours. Certainly, I don’t know anyone (who gave workers extra hours). It’s been just a waste of time.”

What do the Greens say?

The Greens have proposed 10 principles for rewriting Australia’s labour laws.

Like the Labor Party and unions, the Greens argue that too many workers are left in jobs that are “insecure, unfulfilling and low paid”.

Greens leader Richard Di Natale is concerned wage growth has stagnated. Photo: AAP

“Even though people are working harder, wages growth is flatlining and too many people – especially young people – aren’t getting the hours of work they want and need to live a decent life,” the Greens policy document states.

“Insecurity is on the rise and people are in record levels of personal debt. One in four people living in poverty is working full-time.”

The Greens argue that Australia is experiencing record low wage growth and the minimum wage is leaving people in poverty.

“This is not good enough; we must increase the minimum wage to a living wage of at least 60 per cent of the adult median wage so workers can afford to meet their basic needs,” the Greens policy states.

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