Australia needs a pay rise. Even the International Monetary Fund agrees
The Federal Court decision to uphold cuts to penalty rates for 700,000 low-paid workers is more evidence that the rules aren’t working for working people, but are working very well for business.
The Federal Court has rejected an appeal by unions to overturn cuts to penalty rates in the hospitality and retail sectors brought in by the Fair Work Commission. The cuts – between 25 per cent and 50 per cent – have been in place since 1 July.
The ACTU, unions and the ALP condemned the decision.
“(The Court’s decision) shows that the laws in this country do not protect workers and are out of step with community values. Those laws have to change,” said Joanne Schofield, national secretary of United Voice, the union that represents hospitality workers.
“We fear that employer groups will now continue to attempt to attack the weekend pay of workers in other industries.”
ACTU Secretary Sally McManus said the Turnbull government should intervene and “act in the interests of working people”.
“Malcolm Turnbull can stop these wage cuts. Australia needs a pay rise. Working people’s wages are flatlining and their work is becoming more insecure. The government has a responsibility to act,” she said.
“Unions are fighting for workers’ rights: it’s a shame that the Turnbull government won’t lift a finger to help working people.”
IMF urges greater government role in IR
A report by the International Monetary Fund (IMF) – released days after the Federal Court decision – heralds a radical change in economic thinking by a prominent global institution that is at odds with policies of the Turnbull government.
The IMF report recognises that the major problem facing all major advanced economies, including Australia, is low wage growth. Crucially, the IMF says to fix this problem governments need to take a much greater role in industrial relations.
It says governments need to protect and extend minimum wages and, in an era of highly flexible employment with increasing levels of part-time work, governments need to offer “prorated annual, family, and sick leave (for part-time workers) to secure parity with full-time workers”.
Economics commentator Greg Jericho says the IMF recommendations “sets the recent decision by the
Fair Work Commission to cut penalty rates in awards covering the hospitality and retail sectors as a rather backward step”.
“In an era where governments are struggling to work out how to increase wages growth, the biggest recent policy shift in our IR system has been to cut wages,” he said.
Unions are critical for better wages
ACTU Secretary Sally McManus says if inequality is to be addressed in Australia workers need better and stronger rights at work.
“Industrial laws have always existed with one primary purpose: to address the inherent power imbalance that exists between capital and labour. That imbalance has never been greater. Our laws need to change to do their job,” she said.
McManus says that unions are essential to keeping inequality in check.
“The laws that make the job of unions harder must be addressed. It is in the interests of all Australians that we have a strong union movement. We have the harshest laws in the OECD against unions. The union bashing must stop.
“Every other country in the OECD finds ways to support their unions. In Australia we need to build that recognition and develop the supports so unions are able to lift wages and improve our economy. This is the new deal we need.”
Why we need to change the rules
The ACTU argues that employers have found ways to exploit the rules around enterprise bargaining in order to avoid paying fair wages and conditions.
Enterprise-based bargaining was meant to deliver increased wages for increased productivity. This has stopped happening since 2000.
Even more alarmingly, it says, there has been an increase in the number of workers on minimum award rates, which has shot up from 15.2 per cent in 2010 to 23.9 per cent in 2016.
Many of these workers are on or around the minimum wage – around $36,000 a year.
Building stronger rights for workers
The ACTU says we need important changes to our industrial laws to address the power imbalance between employers and workers. These changes would:
- Create more secure jobs by taking away the incentives to casualise work
- Restore a strong, fair and independent industrial umpire
- Ensure a level playing field for bargaining
- Rebuild a relevant, modern and strong safety net for all workers
- Put an end to union-bashing.