ACTU-LIN Research Officer, Sue Kenna outlines the claim for a Living Wage examining the need for an integrated industrial and social wage to ensure maximum social participation and provide equitable income distribution in the future.
The ACTU claim for a Living Wage involves a coalition of social concern
In 1996, the union movement joined forces with community groups to develop the claim in order to combine experience, research and expertise, to counter the policies of the conservative Government and anticipated changes to Australia’s industrial legislation.
This coalition, known as the “New Visions Group”, involves a new social compact which recognises the importance of maintaining living standards for social and equity, as well as economic purposes.
As Bill Kelty stated at the commencement of the living wage proceedings:
“Employers had hoped forever that social considerations will go away from wage rates….From the great debates of the 1890s through virtually every case in the history of wage fixing, they hoped they could scrape away…the consideration of social considerations in wage fixing. They have failed for close to a century and they fail now”.
This paper outlines the claim for a Living Wage in the context of this social concern, examining the need for an integrated industrial and social wage to ensure maximum social participation and provide equitable income distribution in the future.
The Living Wage claim is based on meeting the needs of workers so as to enable them to fully participate in the community. The Claim is premised on affording decent living standards to those living in a civilised society – a concept first enunciated by Justice Higgins in setting the basic wage in 1907.
The claim seeks to raise minimum rates of pay in federal awards to meet the needs of workers. Needless to say, the claim recognises the substantial changes to workers’ requirements since 1907 – it is therefore not limited by a narrow concept of “a worker” or their “cost of living”; the claim is based on an inclusive examination of lifestyles, family needs and forms of employment.
In three stages, the Living Wage claim seeks both a minimum rates adjustment process (to a final hourly rate of $12.00 per hour equal to the entry level for the Metal Industry Award) and three safety net adjustments of $20.00 for all workers not receiving increases through enterprise bargaining.
Each stage of the Living Wage will address conditions of employment which reflect the significant social and industrial changes at the workplace. The Claim will seek to redress potential or existing inequities occurring as a result of these changes.
Firstly, the ACTU is seeking a statement from the Commission on part-time work. The “freeing-up” of part-time work provisions under the new legislation has the potential to reduce the earnings and job security of part time workers who will no longer be able to seek guaranteed minimum hours from the Commission. The Living Wage claim has asked the Commission to issue a statement which ensures that part-time workers are not discriminated against in respect of their wages and conditions of employment.
Stage two of the claim will give special attention to changing patterns of work and stage three will specifically address a reduction in the standard hours of work and the introduction of more flexible options, including the sharing of work.
The cost of the claim will be ameliorated by:
- absorption of the new minimum rates into actual rates
- the fact that safety net adjustments will only be available to those who have not benefited from bargaining
- the fact that the three stages of the claim ensure a phased-in approach to the minimum rate and safety net increases, and
- the claim will only apply to award workers.
Factors affecting the Living Wage Claim:
Beyond meeting the standards enunciated in the Harvester judgement, the Living Wage Claim will incorporate a range of factors which have developed since 1907 and which affect the working and social lives of today’s workers.
The Claim takes account of:
- notions of equity and fairness
- the sharing of family responsibilities (including taking account of various family and household structures and the desirability of flexible working arrangements)
- ameliorating poverty
- examining the cost of living in today’s community by reference to a comprehensive list of expenditure items
- prospective inflation
- Australia’s international obligations
- increased economic growth and productivity
The Living Wage claim seeks to reassert the needs of workers as a central concern of wage fixing, (and s. 88B (2) (c) of the Workplace Relations Act now provides for this). However, we do not accept the Government’s argument that the social wage can meet these needs.
Coalition Of Social Concern:
The above factors have shaped not only the Living Wage claim, but the process of pursuing the claim itself. This process has included the unprecedented cooperation of unions, workers, social welfare organisations, migrant groups, religious organisations, women’s groups, Aboriginal and Torres Strait Islander and youth organisations. The claim has been pursued as a Coalition of Social Concern, involving joint research and consultation.
This coalition represents a new, inclusive approach to wage fixing at a time when we are reassessing the balance between the industrial and social wage.
The Social Wage:
The joint efforts of the union movement and community representatives were most evident during stage one of the Living Wage submissions, in respect of evidence on Australians’ living standards.
The ACTU, ACOSS, and Brotherhood of St. Lawrence led evidence as to the growing inequality of income distribution in Australia. This inequality is most noticeable in:
- the disparity between those on average earnings (AWOTE) and those on awards, reliant on safety net adjustments;
- the disparity between those accessing wage increases through enterprise bargaining, and those reliant on award wages
- the disparity between increases granted to those on Executive salaries compared with ordinary wages earners, and
- the moderation shown by workers over the last ten years in respect of real wage increases, and
- the restraint excercised by workers to secure favourable economic conditions should be rewarded.
To address these inequities the ACTU sought to maintain the benefits achieved in our recent industrial past. Our submission stressed the necessity of maintaining skills-based career-paths and internal relativities in awards. The integrity of award classification structures must be protected to ensure that workers have access to training, can acquire additional skills and knowledge and thereby be rewarded for increased responsibility. This is particularly important for workers in such areas as child care, hospitality and the retail sector, who are generally dependent on award wages.
Such issues clearly reflect the comprehensive nature of the Living Wage claim. While the ACTU took heed of the affect on living standards of the industrial and social wage combined, we needed to address the clear industrial obligations of the Workplace Relations Act.
Issues of “fairness” and “equity”, the concept of the “safety net” and the maintenance of awards are central to the role of the AIRC and the future of wage fixing. Though Governments decide the extent of the social wage, living standards are still primarily determined by the industrial wage – the ACTU therefore argued that minimum award wages must continue to provide “an effective safety net” and the “foundation of minimum standards” as prescribed in the objects to the new legislation.
What then is the future role of the social wage?
It is obvious that the ACTU supports a comprehensive social wage – the mix of expenditure on payments and programmes which contribute to workers’ income and improve their standard of living. Indeed, improved living standards and social participation are central to our Living Wage claim.
As a joint party to the Prices and Incomes Accord from 1983-1996, the ACTU initiated major social wage initiatives, including Medicare, child care assistance, taxation reform, housing assistance, training guarantee and education allowances, family assistance and superannuation. Most of these initiatives are now taken for granted as essential contributions to workers’ lives. (Research conducted by the Brotherhood of St. Lawrence showed that Medicare was particularly supported and relied upon by those surveyed, providing access to essential services which many could not otherwise afford).
However, the ACTU does not support a compensatory approach to the social wage; that is, compensating workers through transfers and payments for relative declines in real wages. This is a “lowest common denominator” approach which is at odds with our historically successful and centralised system of guaranteed minimum wages.
The Joint Governments criticised the ACTU’s Living Wage claim on the basis of its perceived failure to consider the effects of the social wage. The ACTU rejected this submission, noting that the AIRC had always considered the social wage but had not set minimum wages on the basis of any particular link with the social wage.
The ACTU is concerned at the Joint Governments’ submission that all workers are protected by the social wage umbrella and that it is the social wage which determines living standards.
The ACTU and ACOSS jointly commissioned a report into the effects of the Government’s 1996/97 Budget on Australian Households, partly in order to gather evidence as to the likely affects of current social wage provisions.
It is clear from the research that families gain more from the social wage than do singles without dependents. This has led both the Brotherhood of St, Lawrence and ACOSS to call for a new minimum wage benchmark based on the needs of the (growing) group of single households in the community.
Clearly, living standards are determined by the industrial and social wage – with the industrial wage being the primary source of income. A strong industrial wage takes into account the fact that the social wage does not equally assist singles. The ACTU therefore supports the submission of ACOSS that an integrated approach be adopted. Wage levels for low income earners should not be permitted to fall behind community standards (as measured by AWOTE) – the minimum wage should meet the needs of workers and enable them to fully participate in the community. As expressed by ACOSS in their submission to the Living Wage case, this integrated approach would ensure the continuance of the Australian tradition in respect of the relationship between the industrial and social wage in maintaining:
“…a solid minimum wage “floor” for low paid workers, in tandem with a secure income support safety net to ensure that low wage households with additional needs…do not fall into poverty”. (ACOSS, 1996).
The future of wage fixing must surely reflect the future nature of work itself. As Bettina Cass has noted, an increase in part-time and casual employment and new flexible working cycles means that workers are less able to rely on an adequate, secure and consistent full-time income during their working lives.
The number of labour market programmes are diminishing, and high and long-term unemployment has widened the gap between those able to fully participate in our civilised community and those who are severely restricted. For people in work, the gap between those who are able to bargain and those who cannot, continues to provide discrepancies in wages.
Many of the inequities listed earlier can only be addressed by a secure industrial wage.
At the 1995 ACOSS “Future of Work and Access to Incomes” seminar, Bettina Cass advocated an integrated approach to income distribution which reinforces the ACTU’s objective of facilitating social participation. Cass argued that we need to “(recognise) a multiplicity of forms of social participation” to achieve:
- equity in the allocation of resources,
- adequacy of total incomes, and
- the effectiveness of the total system of social protection to achieve social cohesion.
“The objective is to create a system of interdependencies, that enable and resource people to live in cultures and structures which value mutuality and reciprocity and changing life-course circumstances, rather than entrenching dependence and vulnerability. To do this …requires that a number of forms of social participation are recognised and supported in the distribution of disposable incomes derived from combinations of market and social transfer sources through the life course”. (Cass, 1995).
In recognising changes to forms of work and varying forms of social participation, the Living Wage claim acknowledges the relationship between the industrial and social wage, between economic, equity and social considerations. Our prime concern is that a safety net of minimum wages will continue to provide a foundation for the equitable distribution of income.
Sue Kenna, LIN Research Officer
Speech to the Political Economy Summer School, UTLC SA