Tuesday, 11 July 2017

Can't live on the wage you bring home but can't get a raise from the boss? Here's the reasons why

In 2016 an est. 3.89 million people living in New South Wales had a personal weekly income of between $0 and $644 per week, according to the Australian Bureau of Statistics.

In Tasmania an est. 1.03 million people had way less than $573 per week.

Between March Quarter 2016 and March Quarter 2017 wages growth remained at record lows.

So this should come as no surprise……

Industrial relations lawyer Josh Bornstein writing in The Sydney Morning Herald, 5 July 2017:

When Reserve Bank governor Philip Lowe recently declared a "wages crisis" following a prolonged period of low wages growth, it appears to have caught the federal government on the hop. Quick to respond to crises about border protection, terrorism and rising energy prices, this is one crisis that renders the government mute. There is no plan, no working group, or commissioning of a white paper from the Productivity Commission. Instead, the government has announced a plan to pay up to 10,000 "interns" to work in the retail industry for as little as $4 an hour. This plan will only exacerbate the wages crisis.

Phillip Lowe is not the first prominent mandarin to observe that stagnant wages threaten economic growth. A new consensus has emerged since the Global Financial Crisis that anaemic wages growth and increased income inequality is retarding economies and stoking political volatility in developed economies. Nevertheless, Lowe is the first in Australia to join the chorus. His suggested remedy – that employees need to speak up more to request higher pay – is strikingly naive, inviting the obvious question. What if the boss says "no"?

Lowe's counterpart at the Bank of England, Andy Haldane, has offered a more sophisticated analysis of the wages crisis, focused on the transformation of the labour market. Haldane recently observed that profound changes in workplaces had produced a period of "divide and conquer" that left workers less able to bargain for higher wages. "There is power in numbers. A workforce that is more easily divided than in the past may find itself more easily conquered. In other words, a world of divisible work may reduce workers' wage-bargaining power," he said.

The collapse in bargaining power for workers that Haldane has observed is reflected in the plight of Australian trade unions, which are languishing at their weakest point in their history. Only 14.5 per cent of employees belong to a trade union. In the private sector, that number sits at a shocking 10 per cent and falling. The tipping point passed long ago. Australian trade unions are fighting for their survival. That wage growth and employee share of GDP has hit record lows is no coincidence…..

The explanation for the severity of the collapse of unionisation is far more prosaic. It's our laws. Unions have been seriously weakened by 30 years of constant political and legislative attacks. The last conservative prime minister not to establish a royal commission into trade unions was Billy McMahon (1971-1972). For decades, business lobby groups have permanently and successfully campaigned for legislative change that weakens unions.

In this era, workplace laws have been changed in two key ways. First, the laws have been deregulated to encourage employers to cut wages and de-unionise their workplaces. At the same time, unions have been subjected to complex regulation that restricts their ability to access workplaces, recruit members and to bargain for better wages and conditions. The laws have allowed employers unprecedented ability to cut labour costs, outmanoeuvre employees and their unions while at the same time inveigling unions into a kind of regulatory quicksand…..

Read the full article here.

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