Dick Nichols
It's the lying rodent's favourite statistic in the "battle of ideas" over his government's new industrial relations legislation: on average, real wages have risen 12 times more in the last nine years of the John Howard government (14%) than under the previous 13 years of Bob Hawke-Paul Keating Labor (1.2 %).
How can that be? Where's the trick? What's the real story about wages since the Coalition first won government in 1996? It can be summarised in five "snapshots".
The economy has grown strongly, and workers' effort is largely responsible. In 1996, yearly output per worker was about $73,000 (in 2003-04 dollars). By mid-2005, each worker was producing $84,400, a 15.6% increase. What's more, an hour of our labour is now producing on average 16.66% more than in 1996.
That's not mainly because we're now working with a lot more new machinery and equipment — this influence on our productivity has been running at just a tick above its usual growth rate (in the 1990s, for example, it was 1.1% a year compared to its long-run average of 1%). It's because under enterprise bargaining and individual contracts we've been squeezed, cajoled and bribed to work harder.
In the 1990s, our changed "labour practices" added an extra 1.4% a year to output. By contrast, for most of the ALP's Prices and Incomes Accord years (1984-90) total productivity growth crawled along at 0.7% a year.
On average, real wages have also increased, but less than total income and less than our labour productivity. In mid-1996, average weekly earnings stood at $565.40; by mid-2005 this figure was $792.90, a 13.2% increase in real terms. This contrasts with the central years of Labor's Accord, when real wages fell.
As a result, workers' share of national income has fallen slightly. In 1996, the share of labour income in total national income stood at 55%. By mid-2005, it had fallen to 53.3%.
Over the same period the share of corporate profit exploded to levels not seen since 1959 — from 23% to 27%. This was at the expense of labour's share, as well as that of the self-employed. (Under the ALP-ACTU Accord, labour's income share was brutally reduced, from 61% to 55% — the first stage in restoring Australian corporate profitability.)
Wage growth has been spread very unequally. Why hasn't my real wage increased by 14%? Because, according to a recent report by the Australian Centre for Industrial Relations Research and Training (ACIRRT) for Unions NSW, this average rise disguises big differences in rises according to income level.
This is partly due to the exponential increase in executive pay levels, some of which come under the heading "salaries" and have exploded from 22 times average weekly earnings in 1992 to 74 times average weekly earnings today.
The full ACIRRT report is not yet publicly available, but data from the report give a valuable insight into the sort of wage movement that has been taking place in the real world. According to ACIRRT's Steve Jackson: "The high figure the prime minister quotes on average wages is distorted by the huge increases those at the top end of the labour market have experienced over the last eight years."
The report takes these managerial salaries out of the equation. The result, albeit only for the period 1998-2004 and only for full-time workers, was that the average real wage increase was 3.6%.
Moreover, within the non-managerial work force the median increase for the top 10% was 13.8% and for the second top 10% was 4.8% — everyone else got less than the 3.6% average.
Wage rises would have been even less if Howard's industrial relations plans had been in place since 1996. The ACIRRT report hit a nerve within the prime minister's office: it rushed out a media release pointing out that the federal minimum wage had increased 12% since 1996, leaving unanswered the fact that ACIRRT's research deals with average earnings.
Furthermore, minimum wage increases have taken place despite government submissions to safety net wage hearings since 1996. If the Australian Industrial Relations Commission (whose power to set minimum wages is eliminated under Howard's proposed changes to industrial relations laws) had implemented the government's submissions, workers on the minimum wage would be $50 a week worse off.
The same point holds for other aspects of Howard's plan, like the ban on pattern bargaining and the drive to impose individual contracts as the rule for wage-setting. If these had applied since 1996, corporate profit's share of the national pie would be much greater than it is today.
Recent research by David Peats of Griffith University bears this out. According to Peats:
- workers on Australian Workplace Agreements (AWAs) work longer hours than workers on collective agreements;
- non-managerial male workers on AWAs receive 2% less than their counterparts on collective agreements;
- women workers on AWAs receive 11% less than women covered by collective agreements;
- casual workers on AWAs receive 15% less than casuals on collective agreements, and
- permanent part-time workers receive 25% less than their equivalents on AWAs.
This pattern applies even in high-wage industries like mining. For example, WA miners on AWAs are now 8% behind miners elsewhere in Australia.
These trends are already operating when AWAs cover only a small minority of Australian workers and must still compete with collective agreements. New Zealand, with its 1991 Employment Contracts Act, gives us a glimpse of what wage movements would be like if AWAs became general. By 1997 real wages were lower in New Zealand than they had been in 1977, and in some categories like supermarket workers the real wage had fallen by up to 44%!
So how does the Howard ripoff work? We work harder to produce more "cake", and if we produce enough then we'll even get a small increased slice to keep us working more.
The central goal of the government's industrial relations laws is to maintain the rate of growth in the productivity of our labour and to increase business's share of the fruits of that labour. It is also to build up federal budget surpluses with a view to being able to play Santa Claus come election time.
This goal is simply impossible without many workers presently protected by unions becoming worse off. It is impossible without breaking the residual strength of the union movement and breaking down the very idea of collective action to improve our living standards and conditions of work.
It is compatible with a big increase in real wages for a few (those with "market power" in technologically advanced industries) and even with small wage gains for many — but only so long as productivity growth continues and our unions maintain enough strength.
It is impossible without creating a more stressful workplace and an even more unequal and unjust society.
Whenever Howard boasts about wage gains under the Coalition that's the real message he's sending us.
[Dick Nichols is the managing editor of Seeing Red.]
From Green Left Weekly, September 14, 2005.
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