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.