Have you heard the one about how business can’t afford to give a pay rise?
Or the one about how workers will get a wage increase if they can just hang on until things improve?
How about that old chestnut that if workers get a pay increase the economy will fall apart, inflation will go through the roof, and we’ll all be ruined?
These are the classic hits that big business and their highly paid lobbyists roll out every time the issues of wages are on the agenda. As the Fair Work Commission gets set to make its latest ruling on a wage increase for Australia’s lowest paid workers, the usual suspects are singing those same old, tired tunes.
The truth is, business has never had it so good and has never been more profitable. That’s according to the latest research conducted the independent think tank, The Australia Institute.
Greg Jericho from The Centre of Future Work at the Australia Institute has taken a deep dive into Australia’s most recent national accounts. What he discovered was that as profits in Australia have boomed, workers have been stuck in a low-wage trap.
Jericho’s research showed that the share of national income going into corporate profits has grown by nearly 60% in the last 50 years whilst wage growth has remained modest at best.
“There’s been a massive increase in profits (particularly in the resources sector) but that hasn’t been a boom in money going to workers. These national accounts show that there is a record share of national income going to profits, over 31%, the greatest that it’s ever been in our history,” he told On the Job.
Greg Jericho believes that the huge imbalance between profit share and wages has been the product of decades of neo-liberal economic policy that has focused on stripping workers of entitlements and bargaining power.
Action must be taken to ensure the over 13 million working people of our country are sharing our nations prosperity. At the moment they are not, and this cannot continue.
“It started in the ’80s with governments claiming that we have to free up the employment sector with what was termed “flexibility”.
“What happened was that it massively weighted the system in favour of companies. Through the ’80s and ’90s we saw changes in laws governing strikes and union access to workplaces and increased power for employers in bargaining, and it’s just kept going and going”.
Jericho points out that the COVID19 pandemic and other geo-political events like the war in Ukraine have further titled the balance in favour of business profits.
“What’s happened in the past year is massive increases in prices and we’re seeing companies making out like bandits. In fact, the Bureau of Statistics made note that Australian businesses have done well out of rising prices.
“When you’ve got a system weighted to benefit companies and you have economic conditions like we’ve seen in the last year or so, that’s where you see a massive shift in national income going to companies and away from workers”.
The business lobby leans into the issue of productivity as a way to dismiss wage demands, claiming that workers aren’t producing enough to justify a wage increase.
The numbers tell a very different story.
Productivity grew 2.8 per cent in the year to March, almost triple the average of about 1 per cent over the past decade. Productivity is growing at almost twice the average rate over the past decade and profits are increasing at more than 20 per cent, but labour share of GDP has hit an all-time low according to the National Accounts data released by the Australian Bureau of Statistics.
ACTU Secretary Sally McManus has called on the Fair Work Commission to reset the scales when it comes to profits and wages.
“Productivity and profits are at record high levels, while workers are experiencing both real wage cuts and a cost-of-living crisis.
“Workers share of our national income is now at the lowest level on record. Our country needs to face up to this enormous challenge. Working people must not have their living standards go backwards.
“Action must be taken to ensure the over 13 million working people of our country are sharing our nations prosperity. At the moment they are not, and this cannot continue”.