Working women, poverty, and the Annual Wage Review

March 31 is the deadline for submissions to the Annual Wage Review (AWR), conducted by the Fair Work Commission (FWC) as required by the Fair Work Act 2009 (FWA09). There are several reasons why this is worth close attention.

How much will gender equality feature this year?

This will be the first in which the FWC panel is required to take gender equality into account when reviewing and setting new minimum wages. The requirement is an element in the changes made by the new Labor government late last year that made gender equality a prime object of the FWA09 and extended that to the AWR.

The FWC has not made a very good start with this statutory responsibility. Its first Statistical Report, which helps the parties making submissions to understand the economic context for the review, provides 5 graphs in the Wages section. They do not provide any information on the gender pay gap.

Therefore, we will see how seriously the parties who make a submission take this new opportunity, and as the Review proceeds, whether indeed this change will make any difference. Just 2 indicators: recently a highly regarded labour law academic barely mentioned this change in a presentation that explained all the changes to retired union members; and on Radio National’s Life Matters this morning (28/3/23) the discussion about the persistent gender pay gap added nothing about this important change. Time will tell.

The broader context in parliament and the economy

The second reason concerns the broader context for this year’s Review. On the parliamentary front, there has been headline “progress” on the Voice to parliament, carbon emissions reductions, and public spending on manufacturing. In a few days, the Reserve Bank (RBA) will announce its next interest rates rise in response to the latest 7.8% CPI increase in inflation, and no doubt maintain its opposition to significant pay rises. And the Commonwealth Labor government is now well into preparations for its first regular May Budget.

Poverty and working women

Context also includes the story on poverty and inequality, especially for women and children.

The recent profile on poverty from the Australian Council of Social Services (ACOSS) defines the poverty line at 50% of median household disposable income (60% is commonly used in Europe). Among other things the latest profile shows Australian poverty thus:

● 1 in 8 (13%) of all people, including 1 in 6 (17%) children ● 34% of people in sole-parent families and 11% of people in partnered families with children ● 18% of households where the main earner is a woman and 10% of households where the main earner is a man

Hanging over this we have serious banking collapses and recession indicators in some developed countries, or at least continuing instability and downturn and, a final warning from the Intergovernmental Panel on Climate Change (IPCC) that reducing carbon emissions is nowhere near what is required to prevent disaster for humanity and the natural world upon which we all depend.

These 2 overarching crises are interacting; they are not working in parallel. For example, both will drive more working-class people into poverty with prospects for recovery almost zero because of how capitalist societies work.

The Labor government’s $468 billion commitment to warmongering with the AUKUS nuclear-powered submarines is a crime against both equality and climate change reversal, directed at keeping open the trading lines with Australia’s biggest trading partner, China, defined as the biggest future threat to them.

The significance of the AWR for the fight against poverty

The AWR (along with the Budget) is one of the 2 most important decisions that shape lower-income, precarious working-class living standards. About 2.6 million workers are directly affected, including those on the national minimum wage (NMW), and those on the minimum wage rates in the industrial award system. There is potential flow-on to millions of workers who do not have enterprise agreements but are paid marginally above the minimum rate for their job as required in their relevant award. Enterprise Bargaining, even when successful, does not do that. It will be some time before we know whether the changes to multi-employer bargaining made late last year will make a difference.

Most of those 2.6 million plus workers – on low pay and award-reliant – are women.

The gender pay gap

On average women’s wages are $255 per week less than men, a narrowing of the gap, yet, despite this, women workers are experiencing the biggest fall ever in real wages.

The gap narrowed from 14.1 per cent in May 2022 down to 13.3 per cent in November 2022.

Almost certainly this came from last year’s annual wage review decision that helped to boost the incomes of award-reliant workers, especially in the private sector, most of whom are women.

Union membership also makes a big difference. Women who are members of their union take home on average $1400 per week (median), compared with just over $1,000 for women who were not members of their union.

For anyone to pay lip service to the AWR, as most in our union movement still do, is to perpetuate the gender pay gap and accept the drift to poverty, especially among working women and children. Those who are obsessed with enterprise bargaining as the solution are turning their backs on a “wages solidarity” approach to the continued downward pressure on working-classbetter-than-average living standards (notwithstanding other positive achievements that unions have fought for in recent times).

Submissions: last year’s decision and the “struggle” this year

Last year the FWC awarded a better than average 5.2% for those on the NMW and on the lower award rates, and the equivalent of a flat rate based on 4.6% for those on the medium and higher award rates. Even that was a real wage cut, failing to keep up with inflation and no-catch-up for what had been lost in previous years.

As usual, this year we will see major submissions from the Australian Council of Trade Unions (ACTU), and probably some individual unions (for example, the SDA, the AWU and the AMWU).

It seems that the ACTU will seek a result that matches the current inflation rate plus a catch-up for what has been lost. The ACTU claim is for all workers, not just union members. It should be a focal point for a serious union membership drive but there are no signs of that yet.

The unions’ claim will be vigorously opposed by the major employer organisations, as usual.

Probably, ACOSS will make a claim, focusing on how it sees the needs of the most vulnerable.

The Labor government seems also to be preparing a submission. Some government figures have been more circumspect than last year. Gallagher, Chalmers, Burke, and PM Albanese have all used words like “modest” and “sustainable” reflecting their admitted subservience to the RBA management of the economy. However, workplace relations Minister, Tony Burke, implied a stronger claim than that, like the formula the very new government recommended last year.

As mentioned, the RBA is lurking not far away, pushing its ideology that wages must not be allowed to get out of hand even though there is no evidence that wages have caused or are driving inflation. Their media messaging will be watched by the FWC and is, in effect, a de-facto submission. And, just a week ago, the Productivity Commission issued a major report recommending more legal changes to reduce workers’ bargaining power (among other things).

Profits first?

What they are all saying, in effect if not openly, is that we have a profits problem (often described as a “productivity problem”) that takes precedence over the wages problem

There is a sense in which profits are a problem. The volume of profit relative to wages is very high and is talked about as shares of GDP. But it also translates as very high rates of exploitation of workers by the profit-takers. That’s a problem for workers and our labour movement: what level of exploitation is acceptable?

What the employers do with their profit is also a big deal. How much interest on investment loans must they pay given what the RBA interest rate rises are doing to them? How much do they invest “productively” in new equipment, machinery and software compared to how much they take as personal wealth? We know that, in spite of a recent modest uptick in private sector investment, the overall trend has been declining in recent years.

Or how much do they use to gamble in the money markets – i.e. not productively?

This is a big deal for climate change slowing and reversal because inadequate investment from profits requires a bigger effort from public investment in productive capacity that must be climate transformative.

Finally, there is at least one indicator that shows that profits relative to total capital in action are falling, as it is in other countries. If this is true, it explains the trend fall in productive investment, despite the recent marginal improvement, and that has flow-on effects that become problems for workers and their unions.

The choices for workers and their unions

One option is meek acceptance because hegemonic fatalism rules.

Another is to advocate for a better deal with economists at ten paces, and media experts standing nearby to win the messaging battle with appropriate words of outrage or pragmatic achievement, “the best we could do in the circumstances”. This approach defines the role of the working class, starting with union members, as subservient to what is done for them by others, as well-meaning as they might be.

The third option is organised class-wide defiance demanding the ACTU claim (or better if necessary), with lots of education work, and targeted demonstrations and so on. We must not accept that the profit problem should prevail or its logic. Defiance is the best road, and it does not matter if the numbers are small to start with, if what is done by the minority becomes logical and appealing to those who have not yet joined in.

The AWR is an important opportunity for people’s organisations to strike a blow against this anti-equality, immiseration drive by corporations, governments and RBA boards.