By Jonathan Singer
In March, the Australian Council of Trade Unions presented its case for a third "living wage" increase to the Australian Industrial Relations Commission (AIRC). The ACTU called for the award wages of workers earning from the adult minimum of $373.40 up to $527.40 to be increased by $26.60, and for wages above that to rise by 5%.
The ACTU initially called for three annual pay increases to raise the minimum wage to $456. However, in the last two years the AIRC has granted pay rises in living wage cases of just $10 and $14, increasing the minimum wage rates in line with wage movements as a whole.
The ACTU has argued for proportionally higher wage increases for low-paid workers because their wages fail to provide enough to meet basic needs and "restrict the opportunity of ... households to actively participate in society and to live with the common comforts".
In the most recent case, the ACTU supported its argument by comparing the incomes of 17 low-paid workers with standards determined by the University of New South Wales' Social Policy Research Centre (SPRC).
Budget standards
The SPRC's Development of Indicative Budget Standards for Australia gives significant insight into the lives of workers and the poor. The SPRC established two "indicative" or typical household expenditure budgets to meet social and other standards (for example, dietary), modified to take account of actual consumption patterns in Australia.
These models provide a picture of people's needs, independently of their capacity to spend.
The two standards the SPRC set were:
- the "modest but adequate standard ... which affords full opportunity to participate in contemporary Australian society and the basic options that it offers"; and
- the "low cost standard, which represents a level of living which may require frugal and careful management of resources but would still allow social and economic participation consistent with community standards and enable the individual to fulfil community expectation in the workplace, at home and in the community".
People living at these standards lead modest or basic lifestyles. For example, weekly fruit consumption allocated to meet nutritional standards in the "modest but adequate" standard for a 35-year-old, full-time female worker is 5-6 bananas, 4-5 small apples, 1 or 2 oranges, peaches, plums and apricots, a serving of tinned fruit salad, a handful of sultanas, 50 grams of grapes, some melon and perhaps a nectarine or tinned peach. The same woman wears $39 jeans and spends $55 on a "special occasion dress".
Part of the final results (updated for price movements) for private renters are shown in Tables 1 and 2.
Incomes
Budget standards have been used before in wage determination. From 1907, the federal arbitration commission fixed the "basic wage" as one that was a "fair and reasonable" wage for a male unskilled worker to keep a household of "about five persons" (including a dependent female spouse and three children) in "frugal comfort ... appropriate to the normal needs of the average employee regarded as a human being living in a civilised society". More skilled workers were then awarded higher wages at "margins" to the basic wage. In 1967, this system was replaced by a minimum and other combined wages.
The basic wage system gave a measure of the necessary cost of creating the worker's capacity to labour from day to day and between generations in accordance with social norms and the educational, cultural and training needs for particular types of work.
Unconsciously, it applied the Marxist theory of wage determination: that wages are the price of labour-power, expressing its value, which is the socially necessary cost of its reproduction — embodied in the goods and services needed for this.
The SPRC has remeasured the minimum "frugal" standard as the "low cost" standard. The "modest but adequate" standard offers a median measure which may be considered a guide to the average value of labour-power.
While the lack of similarly detailed studies in the past does not allow a direct comparison of the commodities included in equivalent standards over time, the SPRC standards can be compared with the income of particular workers, as the ACTU has, or with income levels (tables 1 and 2).
A comparison of net median incomes (from the Australian Bureau of Statistics employee earnings and average weekly earnings surveys) with the "modest but adequate" standard shows that households with only one person working hardly meet that standard, while those with two members working exceed it. However, this assumes that both household members are permanent full-time workers.
On minimum wages, households with two members working cannot reach the "modest but adequate" standard if they have children.
Table 2 shows that the minimum wage would provide a lifestyle higher than the "low cost" standard if two adult members of a household are working, but the standard would need to be increased to account for additional work-related costs.
If only one person in a household works, the difference is much less, and there is none at all in the case of a couple. The minimum wage is no greater than the basic wage 30 years ago, relative to social standards — or even less, since the basic wage was supposed to provide for more children than are in the SPRC model's household.
Using the "low cost" standard, it also becomes obvious that for households relying on social security payments, life is impossible without "going without" (see table 2).
Living wage
The ACTU's living wage demands have been necessary to try to keep the lowest paid from falling further behind and to maintain or improve the most basic living standard for many workers. The submission by the federal government and employer organisations for a meagre $8 per week increase in the minimum wage and the lowest award wages (and nothing for the rest), and the deferment of living wage increases for up to 12 months for employers' "in economic difficulties" and in rural regions is an attempt to prevent this.
Similarly, the submission of the Australian Chamber of Commerce and Industry to the hearings to apply the minimum wage, shorn of penalties and loadings, as the "no disadvantage" benchmark for all enterprise bargaining agreements (instead of the existing awards) would open the way to reducing all to that level.
The Australian Democrats and the Business Council of Australia (BCA) have called for a wage freeze and the substitution of tax credits or cuts. While this may put more money in the hands of some low-paid workers, in the context of workers paying most (and an increasing proportion) of tax through income tax, this will only redistribute money from better paid workers to the worse off, freeing business of the responsibility of paying decent wages.
The Democrats/BCA policies are similar to those of the ALP and the ACTU under the Accord — wage restraint in return for promised "social wage" improvements (which did not occur). The ACTU's failure in the living wage campaign is not its demands but its refusal to build political support throughout the community by mobilising the industrial strength of the organised workers, including the better paid, to raise the base line for all wage earners.