$30 would make a heck of a difference to the low paid
WHAT is $30 a week worth to you?
Many of us spend that much on coffee each week (at $3 a cup in some cafes, it’s no wonder). But to Australia’s lowest paid workers, it can literally mean having to make a choice between keeping the lights on at night or filling the car with petrol.
This week, unions are launching their annual wage claim on behalf of 1.5 million workers who are reliant on the Award system to set their pay.
The claim is for $30 a week extra for about 745,000 workers, including 32,200 on the National Minimum Wage; and 4.2% for another 792,000 Award-reliant workers – in total about 16% of employees in the Australian workforce.
It follows last year’s “disappointing” decision to award an across-the-board pay rise of just 2.9%, which equated to $17.10 extra for workers on the minimum wage. That didn’t last very long in their pockets.
Announcing the claim today, ACTU Secretary Dave Oliver said it had been designed to stop the gap widening any further between average weekly earnings, and those of low-paid workers.
Since 2000, the National Minimum Wage, which is currently $606.40 a week or $15.96 an hour, has fallen from 50% of average earnings to 43%. And while average earnings have increased by 12% – after inflation – since 2005, the minimum wage has actually fallen 0.3%, That gap widened sharply during WorkChoices, but has not been closed since, as the graphic shows.
Unlike many of the rest of us, Award-reliant workers do not have a collective agreement in their workplace, and are unable to negotiate for wages and conditions directly with their employer. Instead, their pay is set by the Fair Work Commission, which oversees the system of Awards. It is up to unions each year to make a claim to the Fair Work Commission to lift Award wages. If they didn’t, no-one else would.
Mr Oliver says that this year unions are anxious to avoid the entrenchment of an American-style class of working poor in Australia.
“Any further decline in the relative living standards of low-paid workers will put in jeopardy the concept of a fair safety net of minimum wages for people whose work is crucial to Australia’s economy,” he says. “With the rise of insecure forms of work in Australia – which see millions of workers in jobs with unpredictable working hours and no access to sick leave or annual leave – safeguards like a decent minimum wage are more important than ever.”
This year’s wage case will be argued back and forth over the next few months.
Business groups will claim, as they do every year, that awarding a pay rise of $30 a week – 79 cents an hour – will deter employers from hiring.
“Any wage increase awarded by the minimum wage panel needs to be moderate and sustainable, and the ACTU claim is neither,” the chief executive of the Australian Industry Group, Innes Willox, said today. “Such a claim, if granted, would destroy jobs, not create them.” “
But, as ACTU Secretary Dave Oliver says, last year’s wage rise was absorbed by business and the economy has continued to grow with relatively low unemployment and rising profits. Last year saw the best productivity growth in a decade, and February was the single largest month for employment growth since 2000. Yet, over time, the rewards of increasing productivity have been reaped by businesses, with workers – especially the low paid – seeing less than their fair share.
If the Fair Work Commission and its predecessors had adopted the position of employers since 2000, the National Minimum Wage would now be $120 a week – or 20% – lower than it is. It would now be $487.04 a week, or $12.82 an hour, which is just a third of average weekly earnings.
“Our evidence is that the economic impact of our claim on inflation and employment will be minimal,” Mr Oliver says. “What is more important is to ensure that low-paid workers do not fall even further behind and become the working poor. This is a moderate and affordable claim which would be a modest, but very important, step in protecting the living standards of the 1.5 million Australian workers who rely on minimum wages who are the backbone of our economy.”
The Fair Work Commission is expected to hand down its decision in early-June.
Does Australia already have a working poor?
THE “working poor” is a concept well understood in the United States, where inequality is so entrenched that a large proportion of the working population (close to 10% of the total population by one measure) live on or under the poverty line.
Largely because they are earning such low wages, the working poor face numerous obstacles that make it difficult for many of them to find and keep a job, save money, cover basic expenses, and maintain a sense of self-worth.
With no decent minimum wage or industrial protections to speak of, the working poor in the US rely on tips and other measures to survive. It creates a fragile economic house of cards, as the US demonstrates.
In his State of the Union Address last month, US President Barack Obama proposed increasing the federal minimum wage from $US7.25 an hour to $US9 an hour.
A small number of US states set their own minimum wage, the highest being $US9.19 an hour in Washington state.
That’s still well below Australia’s minimum wage. But with US unemployment still at 7.7%, the argument that a low minimum wage is a jobs booster is full of holes.
“In the wealthiest nation on Earth, no one who works full-time should have to live in poverty,” President Obama said in his State of the Union Address.
Is Australia heading down the same path?
Well, it could well be argued we are already there.
Last year’s report of the Howe Inquiry into insecure work in Australia, Lives On Hold, warns of a new divide in the Australian workforce “between those in the ‘core’ of the workforce and those on the ‘periphery’.”
“Their work is not a “career”; it is a series of unrelated temporary positions that they need to pay rent, bills and food,” the Howe Panel wrote.
That does not sound much different from the general understanding of the working poor.
Welfare agencies report that the lion’s share of their cases are not from the homeless, destitute or jobless, but employed people and families who simply do not have the job or income security to manage from week to week.
And recent research by Empirica Research found widespread concern that Australia is heading towards a working poor.
Working Life is a forum to share ideas and opinions about work and life, both light-hearted and serious. The opinions presented on Working Life are those of the author, and do not necessarily represent policies or views of the ACTU.