Losing the fight for fair wages

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Fair Work articleI was making a submission to the former Australian Fair Pay Commission (AFPC) about single-breadwinner working families living below the poverty line. A member of AFPC observed that living in poverty was 'their choice'; if the second parent got a job, the family would not be living in poverty.

This 'blame the victim' attitude reflects fundamental issues in wage-setting in Australia. How many wage packets are needed to avoid poverty or achieve a decent standard of living? Shouldn't parents in low paid families be able to choose for one of them to stay home to care for their children?

The reality is that families on a single wage, at or near the national minimum wage, live in poverty. There is economic pressure for the second parent work just in order to make ends meet.

AFPC data suggests that the average family of four is usually above the poverty line. However this is because AFPC includes the second parent's Newstart unemployment payment in its calculations: stay-at-home parents are not entitled to this payment unless they are actively seeking employment.

If you hold the view that the second parent should 'get a job' or be prepared to do so, the inclusion of this payment might be justified when calculating the overall disposable income of the family. And if it is included, the level of minimum wages can be reduced accordingly.

The Australian Catholic Council for Employment Relations (ACCER) objected to these misleading calculations; from 2008, AFPC shows a separate calculation for families of four where Newstart would not be payable. These figures show that the single breadwinner family is well below the poverty line.

Despite ACCER's repeated urgings for the minimum wage floor to be raised, no action has been taken, presumably on the basis that if things got too tough the second parent could get a job, or start searching for one, and therefore qualify for Newstart.

In AFPC's last decision of July 2009 (when it froze wages), it found families of four without Newstart were living 10 per cent below the poverty line, and those with Newstart were 2 per cent above it. Earlier this year a Fair Work Australia (FWA) report put these families 15 per cent below the poverty line.

This is why ACCER argued for the replacement of Work Choices by new legislation that required the wage tribunal to have regard to the needs of the low paid. The Fair Work Act 2009 does that.

The first wage case heard by Fair Work Australia (FWA) in 2010 was dominated by the need to address the pent up claims resulting from the 2009 wage freeze. It was perhaps not surprising that the parties and FWA did not deal with a range of underlying issues.

The Government's 2010 wage submission did not deal with the needs issue, or the question as to whether Newstart should be taken into account. It said it would 'provide a more detailed analysis of the needs of the low paid' in future wage reviews.

This position was curious; the 2011 position is unforgivable: 'Discussions around the needs of the low paid invariably require a subjective assessment of what constitutes a need, and a working definition of what constitutes poverty ... translating needs into a specific monetary amount can be problematic.'

The Government made no attempt to deal with the issue, despite earlier promises of a detailed analysis. Indeed it sought to denigrate attempts to measure needs and set poverty lines. It seems it intended to weaken or render ineffective the needs-based elements of the legislation.

FWA awarded a 3.4 per cent increase in minimum wage and other pay classifications, which is reasonable given the 3.3 per cent increase in the Consumer Price Index over the past 12 months.

However, ACCER's principal claim was for an increase of $16.60 to minimum wage in order to improve the position of the lowest paid, and a CPI-based increase to all minimum wage rates. Put simply, this claim was based on a comparison betweeen the costs of living and disposable incomes.

But FWA did not adjust minimum wage beyond the general increase. One reason was that it included, in its calculations of disposable income for a family of four, Newstart for the second parent. It estimated disposable income at $100 per week more than a single-breadwinner family on minimum wage is entitled to.

This returns us to the early days of AFPC, with the implicit acceptance that a poverty wage can be set for a family, and that the second parent should seek or get a job in order to break out of poverty. Neither AFPC nor FWA gave reasons why Newstart should be taken into account.

This year's wage review was conducted 120 years after the release of the papal document Rerum Novarum, which had a significant impact on the development of Australian industrial relations and minimum wage-setting.

To mark the anniversary, the Australian Catholic Bishops Conference issued a statement, which heralded the minimum wage provisions of the Fair Work Act. It noted, however, that 'it is only by the outcomes of the decisions that the success of the legislation can be measured'.

To date, the provisions cannot be regarded as a success.


Brian LawrenceBrian Lawrence is Chairman of the Australian Catholic Council for Employment Relations. 

Topic tags: Australian Fair Pay Commission, Fair Work Australia, Rerum Novarum, Catholic Council for Employment Rel

 

 

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Thanks for that analysis, Brian.
Noel McMaster | 08 June 2011


Brian Lawrence's article is timely and very disturbing, especially after a long period when upper-income groups in Australia have increased their incomes very significantly. For all our mythology about social equity in this country, the reality is very different, for the posiiton of many low-paid people has in fact deteriorated significantly, especially when one includes housing costs. The 'blame the victim' attitude, sometimes evident in some media, is cruel and misleading, and results in many families being locked into economic hardship and social disadvantage. ACCER is to be commended for its consistent and professional advocacy for low-income groups and for improved social equity. ACCER also demonstrates how important still are the basic principles from Pope Leo XIII's encyclical, Rerum Novarum, on the rights of working people and the duty of governments to ensure social justice in wage rates and working conditions. As the recent wage case demonstrates, Australia still has a way to go to establish a fairer society. We are also aware how powerful are some interest groups, not just putting intense pressure on governments but also distorting public perceptions of poverty through their dominance of the media.
Bruce Duncan | 08 June 2011


A few years back I seem to remember a senior member of an employer body saying he didn't see why the minimum wage should be set so high. Why should the existence of a notional wife and 2 dependent children be included in the calculation? Why should he have to pay for his employee's family? Surely the price of the work should be set by market forces - how much do I want this labour and how hard is it to come by? It seems our present government is quietly accepting this premise, the triumph of old-fashioned law of the jungle individualism. It really doesn't care whether a family wantsto have a stay-at-home parent, despite the economic benefits down the line.
Joan Seymour | 08 June 2011


An underlying problem is that the job of caring for children has never had a money value put on it, so it hasn't been properly valued by those who have traditionally done it, or society.

The reality is that the career that can most influence the future of the world, parenting, is seen to be the least important. Those who see the true value of this career are condemned to live in poverty. It should be possible for a family to live reasonably on one full time wage. Either parent could elect to go out to work or both could work part time to earn one full time wage equivalent.

That was my hope for the future some years ago, but unfortunately the need for consumerism doesn't allow for that.
Margaret McDonald | 08 June 2011


I appreciate the sentiments behind this article and fully support a return to the Harvester-Higgins characterisation of the basic/family wage. My only corrective is to suggest that Rerum Novarum is somewhat over-estimated. A careful reading of the document shows that it was a comparatively conservative document much and significantly improved upon by Gaudium et Spes, which I think should be seen as the pivotal CST document for our times, not one which was born primarily from Leo's anxiety lest socialism win the hearts of not only the underprivileged and underclasses but thinking Catholics generally.

That was probably never going to be quite the case, but it was only Gaudiunm et Spes that recognised a worker's right to withdraw their labour in the pursuit of justice (para. 68) something Rerum Novarum conspicuously failed to do.
Stephen Kellett | 08 June 2011


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