Big business running same tired scare campaign when it comes to paying increases to workers

Published: 05/07/2022
Category: Minimum wage
Published: 05/07/2022
Category: Minimum wage

There are plenty of reasons to celebrate the 5.2% wage increase minimum wage workers will see appear on their pay slips in a matter of days. 

But it seems big business and conservative politicians aren’t too keen to give workers their fair share.  

Not only is the fearmongering we’re seeing from big business about wage increases pushing higher inflation misleading, but it distracts from the real issues effecting workers.  

But don’t just take our word for it – former head of the Fair Pay Commission and current Reserve Bank board member Professor Ian Harper agrees. 

When it comes to wage increases leading to higher cost-of-living, “Sally McManus is quite right to point that out as an experience in the past,” Harper says. 

Dodgy employers are trying to use the excuse of a 1970s style wage price spiral as a way of denying pay increases to some of Australia’s lowest paid workers.  

But a lot has changed in the past 50 years that mean this argument is exposed for what it is: big business refusing to give workers a fair portion of the national income. 

The 1970s are just that: an entirely different era

It’s completely wrong to think that what happened in the 1970s is still applicable today, says Australian Council of Trade Unions secretary Sally McManus. 

When wage increases occurred in the 1970s, leading to higher inflation, there were key conditions in place that are not the case today.  

For example, one of the major wage rises in the 1970s saw the minimum wage for women lift from 75 per cent of the male wage rate to 100 per cent. This was a one-off event that wouldn’t happen now.  

Additionally, the pay rises in the 1970s were much, much higher than now (we’re talking up to 28 per cent in 1974!).  

So, for unscrupulous bosses and conservative politicians to claim today that the minimum wage increase or pay rises through enterprise bargaining would “flow through” to the entire workforce is just fear mongering.  

Ian Harper, who was appointed to the Fair Pay Commission under John Howard, says the 1970s connection between inflation and wage growth is a thing of the past.

Last month’s decision from the Fair Work Commission to increase the minimum wage to $21.38 an hour was “unsurprising”, Harper says. 

Inflation has already exceeded five per cent and is predicted to reach 7 per cent by the end of this year. Australia’s lowest paid workers have had real wage cuts for years. 

And, technically, despite the historic increase, anything less than a seven per cent increase is still a real pay cut as workers’ financial means to keep up with the cost-of-living diminishes with rising inflation.   

A bargaining system that works for all workers

The bargaining system stops delivering wage growth when employers find loopholes to avoid engaging with their workers.  

Enterprise Bargaining Agreements (EBAs) are where workers come together as a collective and negotiate with their employer for pay rises and better working conditions in exchange for improved productivity. Today, around a third of all workers are covered by an EBA. 

This collective approach is often far more powerful than trying to negotiate terms alone with your employer one-on-one. It also prevents the employer from playing off employees against each other. 

Business profits are up. Productivity rates are up. Workers are the driving force behind that growth – but they’re not the ones getting paid fairly for it. 

Bargaining works best when employees are organised – that means workers joining together in their union and standing with each other.  

And higher wages aren’t just an annual event for unionised workplaces. Union members earn, on average, $250 more per week than non-union members.  

Earn higher wages as a union member

Cover photo credit: Craig Ren on Unsplash

Big business running same tired scare campaign when it comes to paying increases to workers

Big business running same tired scare campaign when it comes to paying increases to workers