If you pause to consider a bit of history, the debate about wages in Australia has never been conducted in quite the mix of economic circumstances, power imbalances and obvious flaws in the system that forms the backdrop to the current tussle in federal parliament over the Albanese government’s industrial relations reform.
Let’s register the economics first: wages growth is running at 2.6 per cent; inflation is at 7.3 per cent and heading to 8 per cent. Yet the Reserve Bank agrees there isn’t a wage-price spiral in evidence.
No-one is really, seriously arguing that lifting real wages poses an existential threat to the economy just now. In fact, most economists argue the very opposite: that we have to lift wages to lift growth.
Then there’s the structural issues.
Three decades of deregulation of the labour markets — designed to deconstruct a centralised wages system that aimed to spread around potential wage gains to all, but which constrained business and exacerbated wage price spirals — has not produced satisfactory outcomes for many involved in the labour market.
The ideal of enterprise-based bargaining, let alone bargaining based on productivity, has largely remained an ideal which has rarely eventuated: the system is so flawed that the majority of employers and employees have either left the system or do not have access to it.
The differential in wages between the top earners and those living below the poverty line has grown to a point unrecognisable to the old ambitions and standards of a living wage which were seen as a confirmation of all that sentiment about Australia’s great egalitarian ethos.
You could summarise the state of play just now as no case versus no power. The current system, which many employers argued so hard to get, doesn’t work.
What power do the unions have?
On the other side of the fence, trade unions have no real power, certainly not in historic terms. They now represent just 14 per cent of the workforce, and the weakest part of the workforce at that.
It is worth keeping these realities in mind when you listen to the current discussion about industrial relations reform. You might not hear too much about them, but they are important counterweight to suggestions of dire consequences of union power being unleashed on an unsuspecting economy; of a sudden surge of huge wage demands.
Opposition Leader Peter Dutton was out on Friday warning that while “everyone is in favour of wages going up, but this is going to mean unions in small businesses right around the country”.
“I’m not sure yet that small businesses fully understand the impact on their businesses and the fact that it takes away from them the ability to negotiate and puts it in the hands of the unions with Fair Work Australia,” he said.
The great threat is supposed to be the proposal in the government’s legislation for multi-employer bargaining: that is, reintroducing the idea of wage deals done by more than one enterprise but, as the proposed legislation currently stands, in constrained circumstances which cannot over-ride any existing enterprise agreements.
The government has already made concessions to business which put significant boundaries around the whole idea of multi-employer bargaining – notably on Thursday excising the whole commercial construction sector from its reach.
What about small business?
And there is the reality of “unions in small business”. As the ACTU’s Sally McManus said on Friday morning: “We are not organising multi-employer bargains in small businesses. We’ve never had high union membership in small businesses, even when we had 60 per cent membership and we’ve got 14 per cent now, it is not going to happen.”
Just what will happen to small business in this new system – and what further constraints and clarifications the government might put on multi-employer bargaining — are now at the centre of the parliamentary debate about the government’s legislation.
With the legislation having now made its way through the House of Representatives, the real fun begins about the details of how these reforms will ultimately come into law, as a Senate inquiry considers the legislation in detail in the next couple of weeks and the negotiations go on with the Senate cross bench.
That most notably means new independent Senator David Pocock and Tasmanian independent Jacqui Lambie.
There is no doubt the government is rushing this legislation and it is this rush, rather than the lack of a case for change, that seems to leave it vulnerable to criticism about its political management on the one hand, but also clearly focused on the cost of living crisis for low income earners on the other.
Those key senators on the cross bench want the bill split up so that the proposed stream of agreements for people on low incomes can be addressed immediately, while other parts of the legislation are considered nextd year.
Workplace Relations Minister Tony Burke’s counter argument to that on Thursday was the example of early childhood educators in Victoria who ended up “pretending” that they had made individual agreements in order to get pay rises.
“You don’t want to have a situation where then you basically have to freeze those pay rates until people go off and back to the award again before people are eligible,” he said.
There is another consideration
There is almost certainly another more basic political consideration here: the government does not want to be exposed to a summer scare campaign about the impact of its legislation which would leave the multi-employer bargaining debate stranded in the new year.
The assessment is that the dire state of real wages means the government has the political momentum right now, and it doesn’t want to lose it.
While employer and lobby groups are complaining about being rushed, the huge swathe of low to middle income earners suffering a very real incomes crisis right now just want the government to “get wages moving”.
This is the basis of the government’s resolve to not budge, and to push for a pre-Christmas deal. Instead of Pocock’s proposal to excise an entire stream of agreements from the legislation, the government’s negotiations are likely to be aimed at simply narrowing the number of people who might be in it.
There is a lot more to this complex legislation than just questions about the definition of how to define a small business in terms of numbers of employees, and the future of multi-employer bargaining.
One notable feature of the debate in the past week has been the approach of the new cross bench in the House. It is not a clear division of ideological views erupting from this debate that is of interest, but the way crossbench members have made different decisions about whether to support legislation which MPs acknowledge still has flaws, or to not support legislation because it still has flaws.
These MPs are considering all the details and want more answers. They are actually considering the legislation in detail.
While there is an unseemly rush on industrial relations just now and this bodes for a most fascinating parliament in the next couple of years.
Laura Tingle is 7.30’s chief political correspondent.
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