Annual Wage Review decision: class warfare continues

Last Friday the Fair Work Commission (FWC) handed down its decision arising from the Annual Wage Review (AWR). This annual Review is required by the Fair Work Act 2009 (FWA09) and decides whether or not Australia’s lowest paid workers get a wage increase and, if so, by how much.

The Commission granted a 3% increase to the minimum wage and ordered that this be applied also to the minimum rates in all industrial awards, starting July 1st.

3% increases the national minimum by $21.60 / week taking it to $740.80 / week or $19.49 / hour, 56 cents / hour more. It is small and inadequate and will lift very few out of persistent poverty.

On the same day, in triumphant tones, the Australian Financial Review (AFR) announced its annual rich list focusing on the ten richest billionaires. Today the AFR continues with more detail about the 200 richest Australians, revealing much about its own priorities and view of the world.

These 2 events tell us much about the balance of power in Australian society, and the current state of class struggle.

Class warfare is alive and well, although being waged more effectively by the rich and powerful than the forces of the 90 percent made up mainly by the 21st century working class.

It’s also worth noting that, on these same days, the AFR added reported the slow and steady march to an economic downturn, probably a recession, and maybe even worse. See here and here, for example.

Some basics about the AWR

The FWC must hand down its decision in time for it to be implemented, if necessary, by July 1st each year. The FWA09 establishes “rules” the Commission must follow to  arrive at its decision. These are summarised quite well in the first part of this year’s decision. From the point of view of workers these rules are well and truly broken.

The FWC says that there are 180,000 workers on the minimum wage. Does this include workers who are deliberately paid less in systemic wage theft by thousands of employers? We don’t really know. Further, there are 2.2 million workers who are paid according to the minimum rates in the relevant Award for the industry they work in.

The Australian Council of Trade Unions (ACTU) makes the principal “submission” for an increase on behalf of all of these workers, both union members and non-members. Several employer organizations make submissions, in opposition to the ACTU, on behalf of employers.

In this Review the ACTU sought a 6% increase ($43 per week) as step 1 of progress to lift all workers out of poverty. Step 2 would proceed in next year’s review and would be a claim for a 5.5% increase. That would be 60 per cent of median wages, if achieved. It is known as a claim for a new “living wage” as the minimum wage in Australia.

The main employer organisations proposed increases at 1.8% and 2% respectively.

The decision

The decision in the main rejects the ACTU proposal, and broadly accepts the “logic” of the employers’ and the government’s argument, 3% being much closer to their claim than the ACTU’s.

Of course minimum wage workers will accept a 3% increase, even though they know better than anyone that it will not go far. Because, right now they are not going to get an increase like that in any other way. In the Australian system many of them will not even know they are now entitled to an increase on July 1.

The ACTU described this poor outcome as a win for workers and emphasized that it would now be a longer path to the “living wage”, 60% of the median wage.

In this short commentary 3 points can be emphasized. 

First, the rationale for this decision is laid out over 140 odd pages. The “logic” mainly accepts the employers’ arguments, and that of the LNP government.

The decision says: “… the panel rejected the union peak body’s claim that the minimum wage should be high enough to lift a single-earner couple with one or two children out of poverty.”

Second, its reasons draw upon data that tries to describe how many workers are living on low wages, and how many of them live in different types of households, including households in which someone else is living on higher wages. Their thinking seems to be that thus not so many workers need an increase like the ACTU proposes and there is not enough of them to justify a higher increase. They suggest the numbers “may” be so few that the problem can be taken care of in the “tax transfer” system run in the government’s Budget.

Think that through. Essentially, the extremely well paid FWC panel seem to suggest that better paid workers should subsidize “household” members on low incomes. It suggests that, because lots of single workers live in households with higher incomes, a bigger increase is less necessary! Of course, there is an arcane economic argument and loads of statistics that try to justify this, just as there are to pull it apart. In the end it’s not economic thought that prevails but naked class power. It’s a form of class warfare.

Much of the reasoning looks at the wages of low paid workers relative to higher paid workers. Hardly any examines the relationship between specific wage levels, wages generally and profit making. They do note that profits are strong and that AWR increases in previous years has not harmed them.

“Business profits growth to the December quarter 2018 was strong at 10.5 per cent, significantly higher than the previous year and the 5- and 10-year averages, but non-mining profits growth at 2.5 per cent was lower than the previous year and the 5- and 10-year averages. We note that profits have grown in the non-mining sector in every year over the past 10 years at an annual average of 3.9 per cent.”

The third key point is about low paid workers, awards and enterprise bargaining.

The AWR process requires that the FWC’s annual decision must encourage collective bargaining. There is no “collective bargaining” in the AWR process. Thus, this “rule” is intended to ensure that each decision does not push the minimum wage and the minimum rates in awards too close to the rates achieved in enterprise bargaining. Putting aside for now that the enterprise bargaining stream is steadily falling apart, there are all sorts of rules within “enterprise bargaining” that keep low paid workers out of it.  

And, indeed, one of the reasons for just 3%, is that this low level does not get in the way of enterprise bargaining. As someone said: “That’s some catch, that Catch 22.”

The AWR’s most harmful “broken rule”

Finally, there is this. The whole AWR process excludes “collective bargaining”. Low paid workers are the objects of the decisions made for them by suited, well paid Commissioners reading and listening to polite submissions from economists in suits. Low paid workers are denied agency. Deliberately. Their status is as “objects” of others deliberations. Their material living standards are decided by others for them. Their status is to watch and accept. They are defined as the “beneficiaries” of others’ thinking. The process demeans low paid workers because the economic arguments and the decision comes from the “goodness” of others’ deliberations dressed up as learned and reasonable.

No union leader, at any level of our movement, should accept that. Rather it must be defied.

The rate of exploitation and 1969

The AWR decision was handed down around several commemorations of the 1969 national strike and actions that defeated the anti-worker “penal powers” of the post war period. It’s instructive to look at the relationship between profits and wages then compared to now.

This is called the rate of exploitation. This graph tries to do that, by comparing two 8 year periods.

The rate of exploitation of twenty first century workers is far too high. This is not a problem for the AWR process. Only a mobilized union campaign – heightened class struggle waged by workers – can make it an issue. Otherwise they are all victims of class warfare.

The path ahead for workers and their unions

The re-election of the anti-worker Morrison government requires that Change the Rules campaign (CtR) must continue.

And, it must be restored as an industrial campaign rather than primarily electoral, and loaded up with “mindful defiance”. Anti-worker laws have been defeated but never by relying on Labor politicians or Fair Work commissioners.

There is a telling picture in the AFR report on the decision. It shows the hearing room with ACTU President Michelle O’Neill and her economics specialist. But no workers, ok maybe a couple. Of course, it’s a moment in time, and it’s possible that a minute earlier or later there were 30 workers or so in the room.

We know that on a AWR hearing day in the last week of the election campaign there was a small, noisy demonstration in front of the FWC building. But that was about it, aside from the occasional media release and the arguing of the submission itself.

The picture captures the failure of this aspect of the ACTU #changetherules campaign. There was no attempt to mobilise thousands of workers to send a message to the Commission that the ACTU claim was justified and should be granted.

In class warfare the bosses know that you get what you want by exercising power. They get it but still not enough of us do.

Every modern union leader, at every level in our movement, must explain to all of our members that the AWR is a big deal for all workers, not just the low paid. This a core material expression of the meaning of solidarity. It is a bosses’ way of thinking to think in any other way.

6000 to 60,000 will be more exciting (and powerful) than 60

In April and May there big Change the Rules demonstrations on working week days, 120,000 plus in Melbourne and 6000 (possibly more) in Sydney.

Next year let’s have 6000 or 60,000 workers from all incomes demonstrating and packing out the FWC hearing rooms. That does require a strategy of imagination and defiance. But it has been done before and there is nothing in the genetic makeup of the 21st century Australian worker that says it cannot be done again.

Fine Dining and Class Warfare … Australian Style


Sticking up for Big Hungry Profiteering

Over the past few days various media reports have highlighted the delicious connections between fine dining, wage theft and class warfare.

Starting in reverse order, we had the Financial Review reporting former BHP Chairman Don Argus railing against the ‘silly’ class war being waged by the ALP.

Putting aside for the moment just how much the Shorten ALP’s programme will NOT disturb class power, and how quickly Angus will push his non-retired corporate representatives into the cuddling up process with a possible new ALP government, we are left wondering what sort of ‘class warfare” would not be “silly” and therefore would meet our corporate warrior’s approval.  

Argus, reacting to a stump speech in regional Queensland (in which among other things Shorten chastised BHP for sacrificing 80 seafarers on good wages) is quoted thus:

“If that is the way they are going to go we will finish up with a divided nation,” … “If they take that path we will end up back where we had the recession we had to have,” ….

Merivale butter (see below) would not melt in his mouth!

In the same article, Argus is supported by the current head of the Australian Industry Group, Innes Willox, and his predecessor, Heather Ridout. Willox is busy cultivating a cuddled-up relationship with the parliamentary ALP in case they win the elections. From her lofty “retirement” perch Ms. Ridout derides the Shorten agenda as “populist”. She seeks to demean the positive elements of the Shorten reform agenda that include mild tax reforms that may well affect her personal investment strategy and, some overdue improvements to Labor’s own Fair Work Act 2009 … from the point of view of workers.  

She is now on the board of the Australian Super and Sims Metal. And, back in 2007-9 she was a major player on behalf of employers in Labor’s Julia Gillard-guided tripartite process that created the “broken rules of the Fair Work Act 2009.

Just one look at Mr. Argus and you just know that he is a 1 percenter who really does “know” the daily long lunch and the fine dining that goes with it.  

So, the sort of ‘class warfare’ that is not silly?

Wage theft in the capital cities

Let’s start with “zombie” enterprise agreements.

Of course, Mr Argus would heartily approve, from his favourite table, of the “not silly” class warfare that he and his mates, including BHP, have engaged in using the “broken rules” of the Fair Work Act 2009. One of these “broken rules” enabled the continuation of “zombie” enterprise agreements negotiated under the notorious Workchoices laws of John Howard. These Agreements made possible terms and conditions that were worse than the minimum standards established in Awards.

You just know that the Merivale empire of up market restaurants, run by one Justin Hemmes, a well-known about Sydney “rich lister”, would be well known to Argus and his mates.

This week, after intervention by the union United Voice on behalf of two courageous employees, the Merivale empire was forced to agree to transfer its hundreds of workers from its “zombie” 2007 enterprise agreement to the Award.

The Financial Review reported this week:

Merivale is reviewing the viability of its business practices due to the axing of a WorkChoices-era enterprise agreement that gave it a significant commercial advantage in the industry.

The Fair Work Commission on Monday terminated Merivale’s long-expired 2007 EA that allowed the hospitality giant to pay some 3000 workers below the award – more than 20 per cent below in some cases – by not applying overtime or full penalty rates for almost a decade.

The Merivale workers’ union, United Voice, whose members made the big step forward possible, explained it better:

Nightclub empire Merivale owned by rich-lister Justin Hemmes will boost young workers’ pay rates – in some cases almost doubling them – after the company was forced to drop its outdated “zombie” WorkChoices agreement.

Under a 2007 agreement workers were trapped on a flat rate below award wages for most working hours, meaning they did not get extra pay for working weekends or night shifts.

Two brave young workers, represented by their union, took Merivale to the Fair Work Commission and the company agreed it would adopt award wages from March 4.

The commission was told that compared to Merivale’s existing pay structure, workers should have been receiving much higher rates under the award.

In the move to the current award, a casual worker will be entitled to an hourly rate of $27.48 for Monday to Friday evenings (up 14 per cent on the $24.40 flat rate), $30.33 on Saturdays (up 25 per cent), $35.39 on Sundays (up 46 per cent) and $50.55 on public holidays (up 98 per cent on a slightly higher rate of $25.50).

One of the applicants was out of pocket $3000 in a year – or missed out on getting an extra 20 per cent of his total salary – because the zombie agreement was so far below Award levels.

Wage theft outback

Given their silence on the matter, Angus, Ridout and Willox no doubt approve of the wage theft going on in First Nations communities, made possible this time in the “broken rules” of the Federal Government’s Community Development Programme.

As the ACTU points out

In the Milingimbi/Ramingining region of the Northern Territory, where the population is 99.8% Indigenous, the program distributed 15 penalties for each participant in 2017.

In the Western Tablelands of Queensland, where the population is 29.3% Indigenous, the program averaged 1.9 penalties per participant.

The CDP forces unemployed people in remote areas to work for free, sometimes for for-profit companies for 25 hours per week, without any basic workplace entitlements, the protection of OHS legislation, or federal worker’s compensation.

That’s not far away from the creation of a penal colony that most Australians will celebrate tomorrow as “our” national day, not the moment of invasion it became for the First Nations inhabitants who have been treated with such disrespect by most, especially corporate Australia, ever since.

Solving tax problems over lunch (and maybe other ‘entertainments’)

Almost finally, you just know that Argus will be watching closely as BHP’s senior executives grapple with how to protect their (and his greed) greed if Labor wins with its  “franking credits” policy. How to unravel all of that is another post entirely.

But to finish off, you have to wonder whether Argus ever crossed paths with these characters in his long lunches and, whether Merivale restaurants were in the mix for their corporate problem solving or “challenge meeting”, as it is called these days.

Yes, here we have confirmed, because we sort of knew anyway, just how big business goes about helping corporate regulators do their job well. And they “refuse to publicly disclose the largesse or potential conflicts of interest… “

What you might call “invisible capitalism” at work, to use the Treasurer’s new and artful defence of capitalism. Wining and dining can be hard work, why not make it more profitable?

Some thoughts on “the right to strike” and the Change the Rules Campaign – Part 2

The “right to strike” versus employer opposition and Laborist naivete

The “right to strike” is one of two (see below) demands that would change the “balance of power” towards working people in a “fair dinkum” way.

The FWA09 restricts workers’ right to strike so severely it is almost meaningless against an array of powers provided to employers to control grievances, disputes of all kinds, industrial award changes, and enterprise bargaining. In effect, the FWA09 denies the “right to strike”.

The right to strike is the countervailing power to the employers’ unrestricted right to withdraw their capital or to transform its use from productive activity to non-productive forms of profiteering, or to re-locate it in another country.

In struggling for a genuine “right to strike” the labour movement is seeking to change a law that a Labor government established in 2009, and that its union leaders consented to. At that time, most activists in that great struggle went to sleep, believing that what Labor was delivering was adequate. Those who did try to explain the serious shortfalls of FWA09 were criticised (not “team players”) and marginalized. That minority have now been proven to be correct.

There is a lot of other detail, also quite important, that will be contested terrain in the months ahead but also perhaps more amenable to agreement. For example, in enterprise bargaining FWA09 empowers employers to use just a few workers (who may not even work under the proposed agreement) to create an enterprise agreement that will cover many other workers who do work under the Agreement. Such enterprise agreements reduce wages, conditions and rights against previously established standards. Also, agreement might be reached to restrict or prevent employers from taking on workers as “self-employed”, individualized workers to drive down wages and conditions.

Laborist discomfort with the “right to strike”: tensions to emerge

Again today, not everyone is comfortable about changing the rules to enable an unrestricted “right to strike”. Some, especially in the parliamentary wing of the ALP  will argue that this change will harm the ALP’s election prospects. They also have some supporters in the leadership of the union movement, at both peak and mid-levels.

Generally speaking, they are comfortable with a minimalist programme of change to the FWA09, one that does not upset the employers or the voting public too much. They believe that the antagonisms between workers and their unions on the one hand, and employers on the other, are not fundamental or severe and can be managed with minimal conflict.

Instead, the minimalists prioritize more power to the Fair Work Commission (FWC) to arbitrate disputes, some modest rights for unions to access workplaces and create disputes for arbitration, and tougher limits on employers using their “lock out” and “termination of agreement” powers in enterprise bargaining.

It should be noted and discussed that the recent and important ACTU pamphlet, “The system is broken- Big Business has too much power”, does not mention the “right to strike” issue in “changing the rules”.[1] Restoring stronger arbitration power to the Fair Work Commission does not give more power to workers.

Usually, the advocates of minimalist and technocratic change, will invoke “pragmatism” as the logic for this approach.

But really, their “pragmatism” is the height of “naïve idealism” because it leaves fundamental employer power intact and assumes that employers will not take advantage of that, and that workers’ power is not necessary for the FWC to treat workers fairly. The minimalist approach assumes that workers themselves cannot exercise their power democratically and effectively, and therefore cannot give their unions more power.

In the real world, a more fundamental reform programme is necessary. Fundamental reform enables a more decisive shift in the balance of power towards workers and their unions at both workplace and industry levels.

The unfettered right to strike is the most important element of reform, including in Award based bargaining (see below).

Direct strike power to workers enables workers, including through their unions, to do what unions were originally formed to do: limit and prevent the employers’ use of the competition threat to freeze and drive down wages, conditions and rights. It gives effect to the democratic idea that workers themselves, in their unions or in other types of combination, should be enabled to exercise their potential power against the powers of the employers. Thus, workers themselves are more in charge of their present and future.

Also, it brings Australia into real alignment with agreed ILO minimum standards on workers’ rights to organise and bargaining collectively.[2]

Bargaining rights: enterprise bargaining, “supply chain bargaining” and Award bargaining

In some union discussions “supply chain bargaining” appears to be the multi -employer bargaining that is quite popular. As one form of “multi-employer” bargaining it is not objectionable, provided its serious limits are not ignored or glossed over.

In a “supply chain” the focus is on a group of employers who are in “cooperation” with each other to deliver a product or a service to its ultimate customer. However, first there is usually one employer who is the main controller of everything else in the chain. Also, each employer link in the chain is likely to be in competition with an employer who is not in the chain. The competitor not in the supply chain might like to be and can offer lower wage costs as the competitive edge to get into it.  Or, the competitor might be in a competitive supply chain able to deliver the same or a similar product to a similar or the same type of customer at a lower wages standard.

Therefore, there are real limits on how “supply chain bargaining” deals with the problem of the downward pressure on wages etc that is created by uncontrolled competition between employers in the same industry or type of business, nor how it deals with the 21st century reality of global supply chains.

On the other hand, the enabling of a new form of Award based bargaining (that includes a “right to strike”) is a big step toward limiting, maybe preventing in some circumstances, the employers’ competition power.  How changes to Awards are processed these days is a big part of the broken rules of the FWA09.

Every effort should be made to bring together experienced and new worker activists to discuss how to advance the fundamental and comprehensive approach. Those in the parliamentary Labor Party and unions who seek, as they have before, to dilute proposals to establish a legal “right to strike”, can be challenged and pushed back.

Other significant factors that shape this struggle for genuine and fundamental strengthening of workers’ powers

There are other factors that do influence how this struggle might evolve in the months and years ahead. One of them is the rapid change in the composition of the workforce. There is also union density currently running at about 12-14% overall. This has to be taken into account in developing programme, priorities, strategy and tactics, and shape how the “the right to strike” can be achieved. Just calling for the “right to strike” in the most militant manner possible will simply not be adequate for the situation we face. And, there is the timing of the national election.

Sally McManus (ACTU Secretary), and other union leaders who have stressed the continuation of the campaign after the next election, are correct to do so. If the Labor Party wins, including with Greens support, a continued campaign will require a clear and determined strategy very different to the collapse of the Your Rights at Work campaign over 2007-9. It will not be adequate to declare, as in 2009, that there is “unfinished business” and then do nothing about it.

The labour movement’s strategy must aim to bring 21st century workers into the experience of struggle, with a new foundation in which they discover directly in their own workplaces and across their industries and regions, the great untapped and democratic potential of their power in combination. The workers themselves, including through their union membership, reveal the power of any appeal to “join their union”.

[1] The “right to strike” issue is put forward in the more comprehensive ACTU Campaign Kit at pp 34-35: here: https://d3n8a8pro7vhmx.cloudfront.net/actuonline/pages/814/attachments/original/1521588484/ctr_campaignkit2018_digital.pdf?1521588484

[2] Andrew Stewart provides a summary of the issues at stake re the ILO standards here: http://communitywebs.org/labourhistory/wp-content/uploads/2016/05/Right-to-strike.pdf