Minimum wage increase a win for unions, workers & the economic recovery

The vital role of union advocacy has been underlined by the Fair Work Commission's decision to increase Australia's minimum wage by 2.5 per cent.

Michele O'Neil, President of the ACTU said the decision was a win for workers.

'This pay rise will go to 1 in 4 working people. These are workers who are getting us through this pandemic. Workers who will take their pay rise and spend it in their local community, to help keep the recovery going for everyone.'

She says the federal government sided with big business in arguing that workers should get a pay cut, or a pay freeze.

'This pay increase only happened because unions fought for it. Because it’s only unions that are the collective voice and combined power of workers.'

Thanks to decades of collective campaigning and bargaining, most IEU members are paid well above Award rates and will not feel an immediate effect. But experts believe the decision provides a 'benchmark' that indirectly benefits all employees.

And some IEU members in ELICOS, Private Training Providences and other Award-based workplaces will directly benefit from the increase.

The minimum wage for Australia's lowest-paid workers will now be $20.33 an hour, or $772.60 a week for full-time workers, effective 1 July.

It will mean an extra $18.80 a week for one in four of Australia's full-time workers.

The increase was just 1.75% last year, during the height of the pandemic recession, the lowest increase in 12 years. The Centre for Future Work's director Jim Stanford told ABC News the increase was 'typically around 3-3.5%' before the pandemic.

'Consumers have done all the heavy lifting in the recovery, and they can't keep doing that unless they get a decent wage increase in their pocket.'

The Australian Chamber of Commerce and Industry had been arguing for just a 1.1 per cent pay increase.

Michele O'Neil says the increase is not enough.

'Wages have been stagnant for 8 long, hard years. This 2.5% won’t fix that. Unions were fighting for a 3.5% increase this year - and we’ll keep up the fight until workers get a pay rise that is fair and just.'

The problems are not limited to those on Award minimums - a recent analysis by the McKell institute found that the wage-suppression policies of the Coalition Government is costing the average worker over $250 per week.

Professor John Buchanan from the University of Sydney told The Conversation 'Australia has a serious wage problem'

'Over the past decade wages for all but the top 20% of income earners have flat-lined,' he wrote.

He says the FWC decisions will have 'indirect benefit for workers earning more, and aid economic renewal'.

'Sluggish wage growth does not just result in greater wage inequality. It effectively retards demand, a key determinant of employment.'

Prof Buchanan said having 'a publicly defined wages norm of 2.5%' helps all workers because it 'provides a benchmark for what is reasonable to claim' for higher-paid workers when they participate in enterprise bargaining or negotiate an individual contract.

Emeritus Professor Ray Markey and Associate Professor Martin O’Brien told Nine all of the government’s policy settings pre- and post-COVID have been directed towards 'cheapening labour'.

The government opposed a significant minimum wage increase, and previously supported reducing penalty rates.

Their studies have concluded that minimum wage increases do not have a 'disemployment effect' as conservative lobbyists held.

'On a theoretical basis many economists, such as at the US Economic Policy Institute, now argue that as workers’ incomes increase, so does their spending – and thus the demand for goods and services and the labour that produces them.'

But what good is a minimum wage if workers aren’t getting it?

The minimum wage decision might help the economy and those with secure employment, but what of those being excluded from proper employment conditions?

Megaphone Journal examined the joint report into farm work by Unions NSW and the Migrant Worker's Centre and found piece rates - the practice of paying workers for the amount of produce they pick rather than an hourly rate - are used in an 'overwhelming number of cases' to circumvent minimum wage requirements.

The National Horticulture Industry Piece Rate Survey found 91% of 1300 workers surveyed had been paid by piece rates.

'78% of survey respondents reported being underpaid during their time doing farm work. 80% were underpaid while on piece rates, while 61% were underpaid on hourly rates,' Megaphone reports.

Some piece rate workers reported earning less than $1 an hour.

Other key survey findings:

·       12% of respondents reported having worked as many as 20 hours a day under piece rate arrangements at least once

·       26% of survey respondents reported employer breaches related to work health and safety laws

·       63% of respondents were not given a choice between piece rates or being paid an hourly rate

·       34% said they had never signed a piece rate agreement.

'Piece rate workers have no entitlements to ordinary hours of work and rostering arrangements, meal allowance, and overtime. In any other workplace, like a factory or a warehouse, this would be unthinkable.'

As a result of the shocking findings, the Migrant Workers’ Centre is running a petition to call on the Fair Work Commission to amend the Horticulture Award to guarantee workers are paid at least minimum wage.