Mass “Wokism” on Wages?

This post argues we should intensify discussion and activism on wages, living standards and the economy. The time is right for a strong catch-up wage claim in the Annual Wage Review now underway (AWR25).

Despite recent small wage gains for some, working-class incomes are below what is needed to recover from losses over the past decade, perpetuating a standard of living crisis for the majority. Greg Jericho’s analysis in The Guardian highlights the real dollar decline in household incomes, underscoring the urgency of addressing wage stagnation.

The Labor government has introduced a long list of small (mainly) steps to overcome the stagnation in the standard of living felt by at least a big minority, as it tries to lift economic growth after the general stagnation set up by the previous Liberal-National Party (LNP) government in its handling of the pandemic. However, the Reserve Bank of Australia’s (RBA) neoliberal approach to interest rates, and modest industrial wage outcomes, remain significant obstacles. Labor’s improved tax cuts are a positive step, but more is needed.

AWR25 and the Election

Two critical decisions loom during the election period: the RBA’s interest rate decision and the AWR25. The government directly controls neither, but public advocacy by the government can influence outcomes. There is a rich opportunity to expose Opposition Leader Peter Dutton’s superficial claims of supporting workers. He will oppose catch-up pay rises for low-income and marginally better-off workers.

Recent Australian Bureau of Statistics (ABS) data shows inflation is now settled within the RBA’s target range, prompting calls for interest rate cuts. The RBA knows its decision will significantly impact the election, so we should not assume that their own logic will mean a rate cut.

The ACTU’s Wage Claim

The Australian Council of Trade Unions (ACTU) is preparing its submission for AWR25. Union membership is at 13%, a slight increase, but most affected workers are non-union members, who accept what union activity wins for them. The AWR25 outcome will also influence age pensions and other social entitlements.

We do not know yet whether the ACTU will push for a significant catch-up wage increase—4%, 5%, 6%, or more—to address the decade-long decline in real wages. Employer organizations, the RBA, and the LNP are lining up to oppose such increases, effectively advocating for real wage cuts.

Engaging Workers: is the AWR25 wage claim workers’ business?

First submissions from the unions, employer organizations, and other parties are due in early April. Some early verbal jousting between employers and unions is starting.

2.6 million low-income workers are directly affected and, at least, another 1 million indirectly.

Most of them have never been asked their view on what the wage claim should be. The Fair Work Act 2009 as amended does not guarantee that right. It is entirely a question of union strategy.

Union membership is currently at 13% of the workforce. A democratic approach would involve consulting both union and non-union workers about their views on wage claims. Thus, general workers’ learning about the wage system, how it shapes their lives, and what they can do about it, could enable stronger workers agency and attract non-union workers into membership. A strong catch-up claim, supported by planned collective learning and action, will grow unions, as it has done in the past, reinforce the ACTU’s case and counter employer arguments for wage cuts.

Some union softies may caution against a strong catch-up claim, preferring to keep the whole thing secret, fearing it could deter the RBA from cutting interest rates. This ignores the plight of renters and others in precarious living situations.

Wage Relativities and Executive Salaries

Understanding wage relativities is crucial learning for established and potential union members.

For example, the National Minimum Wage (NMW) set by the FWC in last year’s AWR is $915.80 per week. The AWR24 also sets minimum award rates, for example, the tradesperson base rate is $1032.30.

The ABS says the average wage for men is $2074.20. It's lower for women and that shows one measure of the gender pay gap. The MTAWE (Male Total Average Weekly Earnings) measure is lower but is important because it is the “community benchmark” for the age pension and other social entitlements. Unemployment benefits are excluded. (More on that can be found here.)

The median wage for men is $1789. This is relevant to how to work out a “living wage”. (See more below.)

In stark contrast, executive salaries range from $29,000 to $52,000 per week (early 2024 data), at the bottom end 32 times the NMW, an underestimate of how bad it is because executive salaries are included in the ABS wages data. This disparity justifies a strong catch-up claim.

Profits, Wages, and Productivity

Profits remain high despite recent dips, while wages have stagnated.

The rate of exploitation—profits relative to wages—has slightly declined but is historically high.

Employers are desperate to reverse this trend, restoring higher exploitation.

But exploitation is bad, right? Would we not want to see the rate of exploitation continue to fall, despite its impact on profiteering? This contradiction in capitalism must be understood as it has been in labour movement history.

The employers will justify the wage cut with a lot of bulldust about productivity, but we will return to that in another post. (There is this in the meantime.)

What about a “Living Wage”?

Recently, to his credit, AMWU National Secretary Steve Murphy, raised this in public discussion about what the ACTU catch-up claim might be. He said, in part:

I think it is time we build support to establish a living wage.

Minimum wage doesn’t provide for an enjoyable quality of life. It a subsistence level of pay to provide for workers to exist.

The question we should ask is, if we provide our labour for work in modern Australia, with the wealth we have as a country, what should we all have access to and what is an appropriate wage that would provide a decent quality of life and the ability to enjoy our leisure time?

The ACTU defines a living wage as 60% of the median wage, maling it $1073.40.

Achieving this Living wage in AWR25 requires a 14.7% increase in the NMW, relatively less for minimum rates above that in our awards. What might “building support” for that mean and when might we start?

Some might argue that instead of the FWC setting minimum wages through the AWR, the Parliament should set the living wage in statute. However, this approach can give statutory control to an LNP government and dodges the determined pursuit of workers’ right to strike, the removal of all the hurdles and other obstacles that Labor itself has created.  Meanwhile, employers’ unrestricted right to their capital strike, to threaten or withdraw capital from an enterprise and industry, continues. The living wage statute approach denies workers their collective agency and the growth opportunities that go with democratically worked-out industrial action. If we have a strike law (highly constricted) for when workers negotiate wages etcetera in their enterprise agreement, why should that be denied to workers on minimum award rights?

There are other relativities – e.g. minimum wages relative to the poverty line – that will be covered in a future post.

Union Strategy and Worker Solidarity

The ACTU’s current strategy focuses on enterprise bargaining, lobbying for legislative changes using a “friendly Labor government, and protecting standards in the ongoing and separate Award reviews. While these efforts have yielded some gains, they are insufficient to address the broader standard of living crisis.

Some union leaders claim that this strategy and the Labor government’s responsiveness to it has lifted union density from 12% to 13%, shown in recent ABS data.

There has always been a minority of union members who say the union wage policy and strategy should ignore non-union members. They argue these workers have made their lumpy bed and they can go lie in it. That’s exactly what enterprise bargaining is intended to do: break down working-class solidarity.

This plays right into the hands of the employers because it encourages bigger differentials in wage rates that tend to suck overall rates downwards. Competition between employers based on lower non-union rates is bad for both union and non-union workers. Organizing non-union workers to join and win the battle over wages and conditions is why unions were invented in the first place.

Our wage strategy must start from within the restrictive reality of a damaging wage system to break out of it. The focus must be on AWR25 rather than enterprise bargaining precisely because it can engage masses of workers in taking wages out of competition. That’s called a wages solidarity strategy.

3 things flow. First, an extra strong claim, backed with the economics that makes it common sense. Second, defiance-laden multi-union action days sequenced to build from one level of support to a higher level. Don’t leave the struggle only in the hands of the industrial advocates and commissioners, the economists and the politicians.

Third: build a serious union education effort in a "mass style", that reaches passive union members and the unorganized workers. The conceptual model is in our history: in the mid '70s the Australian Manufacturing Workers Union (AMWU), in a different form at the time, published in each monthly journal for every member a continuous series of 800-100-word plain language explanation of the economics of wages, prices and profits. It went for about 20 issues in a row.

This project took to the members the basic economics that their shop stewards were learning in the AMWU courses and seminars. This project counteracted the dumbing down of workers' capacity to understand and apply their economics and politics, flowing into learning about the social wage, the interaction between the industrial wage, taxation and government spending on social requirements and initiatives.

In our times, the technical possibilities that go with social media and related platforms could be even more effective, especially if seen by its working-class audience as all about them and their future, not about promoting a political party.

The whole approach should be conceived and developed as a spiral in which each year’s effort lays the foundations for a bigger mobilization in the next year.

The Immediate Options

One option for our union movement is to not make waves with a strong claim and campaign and go again with an advocacy-only approach in front of the AWR25 Commissioners, and a claim that is a secret to most low-paid workers. No defiance.

That would be a wage cut victory and profit recovery to the big corporations and reinforces the wrong propaganda from them and their hired private economists that higher wages damage the cost of living.

The second option is a calculated strategy that defies the hand-wring and whingeing about stagnant living standards with an offensive proposal, that would highlight why a Dutton government would be a dead end for workers, their dependent children and their ageing parents.

A strong wage claim in AWR25, backed by collective action and education, can lay the groundwork for broader economic and social reforms, including reversing climate change and closing the gap.

The clock is ticking: how can workers have their say before April on what they need to rescue their standard of living?