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We're Blowing Up The Australian Ideal Of Fair Pay For Fair Effort

We invented the 'living wage' and now we're destroying it with neglect.

08/06/2017 1:31 PM AEST | Updated 08/06/2017 1:32 PM AEST
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What do we tell these kids about their future in the workplace? (Photo by Jennifer Polixenni Brankin/WireImage)

In April 1897 Joseph Furphy wrote to the editor of the now defunct Bulletin magazine: "I have just finished writing a full-sized novel: title Such is Life", he announced. "scene, Riverina and northern Vic; temper, democratic, bias, offensively Australian".

Here in a pithy sentence -- and in the classic 1903 work authored by 'Tom Collins' -- was an early expression of what came to be known as the Australian way of life: excessive inequalities of wealth, status and power were to have no place in a new world country such as ours.

The Australian way spoke to the simple human aspiration to lead a good life: a fair day's pay for a fair day's work, a fair say for working women and men in our workplaces and parliaments, and the nation's civic life. Australia invented the concept of the 'living wage' via the 1907 Harvester judgement. A 'fair and reasonable' wage was premised on the 'normal needs of the average employee regarded as a human being living in a civilized community' rather than merely company profits.

Despite depressions, two world wars and recent dabbling in free-market economics, our way -- call it the 'fair go' or a compact between government and the people and between generations -- prevailed, at least until recently.

Reducing the purchasing power of the bulk of the population, the means by which we spend our money in shops, save to buy a house or service a mortgage and pay taxes, is bad for business, bad for jobs, bad for aspiring or existing homeowners and bad for the budget, to say nothing of our ability to fund essential services such as health, education and national security.

In 2017, the Australian way is fraying. Globalisation, automation and technological disruption, declining manufacturing, and the collapse of mass unionism paired with decentralised wage determination have combined to challenge its core ethos. Full-time jobs are collapsing in favour of part-time, casualised and precarious contract work. Underpayment of wages and workplace exploitation is rife. Company profits grow apace (by some 40 percent this year alone) yet annual wages growth is at record low rates (0.9 percent). The fruits of 26 years of continuous, record national economic growth have not been shared equally.

In this context recent Fair Work Commission decisions are troubling. This week, the commission announced that the minimum wage will increase by $18.29 per hour, or $22.20 per week, just under half what the ACTU had asked for. This modest rise is a slap in face for low-paid workers coming on top of the commission's announcement in February of historic cuts to weekend penalty rates paid to approximately 700,000 retail, fast food, hospitality and pharmacy staff, and not obviated in the slightest by the FWC's Monday decision not to fully implement them until 2020. Reductions to public holiday penalty rates will proceed as scheduled on July 1. Remarkably, retailing peak bodies cried foul. 'Retailers need a break and they need it now,' National Retail Association boss Dominique Lamb protested.

Employers should be careful what they wish for. There is abundant evidence that reductions in penalty rates will not save or create more jobs or stimulate growth. Cutting penalties -- especially without commensurate increases to the base rate of pay -- is not just unfair but dumb economics. Wages are not just some impost on business. Stagnant or falling real wages, and rising inequality, are bad for all Australians and overall economy, not just low and middle income earners. Don't take my word for it, consult the warnings of the World Bank and International Monetary Fund, scarcely red-ragger organisations.

MORE ON THE BLOG:

If You Want Faster Wage Growth, Here's How To Get It

Why We Need To Tackle Pay Inequity For The Benefit Of All

Reducing the purchasing power of the bulk of the population, the means by which we spend our money in shops, save to buy a house or service a mortgage and pay taxes, is bad for business, bad for jobs, bad for aspiring or existing homeowners and bad for the budget, to say nothing of our ability to fund essential services such as health, education and national security. A dog-eat-dog society is also bad for democracy, fostering extremist right and left-wing politics.

Our national inheritance is not to be discarded lightly. We need to fix our broken industrial relations system to re-create a resilient pro-business, pro-worker framework which prizes profit and productivity as much as cooperation and fairness.

We need an economy tailored towards the long-run and not one sustained by ephemeral mining and property booms, or lazy, counter-productive measures such as cutting wages. Reasserting the place of collective bargaining over 'flexible' individual agreements is one solution. If labour market institutions and business groups continue to ignore the national interest, innovative solutions need to be considered.

One option, as I have argued, is to mandate by law employee representatives sitting on company boards (codetermination), tackling excessive inequality and insecure work at root, and fostering cooperation and productivity, as is the case in Germany. Or do we desire to rewrite our national creed: temper undemocratic; offensively un-Australian?

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