Pay rises need to make a comeback, and there’s a simple way to win them

If someone took $20,000 from you, you’d probably want it back. In fact, you’d probably think it’s worth quite a bit of effort to get it back. That sort of money can mean a lot of extra security, comfort and dignity for most workers.

And if you and every single one of your workmates had that kind of money taken out of your pay packets, with most of this missing cash flowing to the already filthy rich, it’s pretty likely you’d expect your union to try to organise to win it back.

The reality, however, is that most unions in this country have done very little to organise a fight to reverse the massive hit to our incomes due to inflation over the past four years. Before looking at why this is the case, it’s worth exploring just how much we’ve gone backwards over that time.

Writing in the Guardian in May, economist Greg Jericho pointed out that a worker on the average wage is 4.4 percent behind where they would be if wages had kept up with inflation over the past four years, as measured by the Consumer Price Index. This means that someone earning the average wage ($93,000 per year in 2021) is around $4,000 per year worse off, in 2021 dollars. Adjusted for inflation (CPI), that’s the equivalent of around $90 per week in today’s money, or $180 missing from each fortnightly pay packet.

But even this is a significant understatement of the financial pain many wage earners are experiencing.

Jericho points out that the CPI is designed to exclude changes in average mortgage costs, which have been a massive burden for many workers over the past four years. These mortgage costs are included in another measure of inflation compiled by the Australian Bureau of Statistics—the Employee Living Cost Index (ELCI).

Using this measure, Jericho calculates that the average wage earner in Australia is not 4.4 percent behind inflation, but double that: on average each of us is a staggering 8.9 percent behind where we would be had wages kept up with inflation since 2021. Put in dollar terms, this amounts to nearly $180 per week or $360 per fortnight.

What if we add up all these weekly losses? How much have we lost in total during the inflationary surge since 2021? Detailed statistical modelling carried out for Red Flag quantifies this loss:

• Someone on the average wage ($93,898 in 2021) has lost a total of $23,374 since July 2021, compared to if they’d kept up with the Consumer Price Index.
• This figure rises to a staggering $33,919 in wages lost to inflation since 2021 if we use the Employee Living Cost Index instead of CPI.
• Average wages are skewed upwards by a minority of very highly paid wage earners like senior managers. The median wage is $20,000 lower, and is more representative of what most of us earn: half of us earn less than the median, and half earn more. Still, someone on the median female full-time wage ($71,666 in 2021) has lost $12,767 over four years compared to inflation measured by the CPI—or $20,815 if we use the ELCI.

Wages set by enterprise agreements will vary from this average, but the big majority will give a similarly bleak picture.

Of course, all of these are average figures. Many of us will have been impacted less than this, others more. But they give us a general picture of the staggering degree to which wages have gone backwards over the past four years.

This money has not simply disappeared. Much of it has been redistributed from wage earners to corporations and the super-rich. A study by the Australia Institute in 2023 found that surging corporate profits accounted for more than half of the increase in prices since 2021; wage earners’ loss has been corporate Australia’s gain.

Since 2021, while wages have fallen behind prices by 4.4 percent (CPI) or 8.9 percent (ELCI), the total value of companies listed on the Australian Stock Exchange has jumped from $2,500 billion to $3,155 billion. This is an increase of 26 percent, well ahead of the rate of inflation. And the combined wealth of the annual Rich 200 list published by the Australian Financial Review has soared from $480 billion in 2021 to $668 billion this year—a jump of 39 percent in just four years.

Companies fattening their profits and their balance sheets at our expense isn’t some law of nature. It’s a policy choice by the rich, by the capitalists, and by the governments that serve them—both Liberal and (mainly) Labor over the past four years.

In the face of this onslaught, our unions have been largely passive. So much so that it no longer goes without saying that it is actually possible to win pay rises: they can be achieved through industrial action, and unions are supposed to play a role in making this happen.

A small number of unions showed this back when inflation was lifting off in late 2021, winning a sprinkling of enterprise agreements that included CPI-linked pay clauses at major companies including Toll Global Express, Teys meatworks and STC trucking. These clauses ensured that workers at these companies at least didn’t go backwards relative to CPI. The Australian Financial Review spent plenty of words sooking about these results in the months and years that followed; anything that moves the burden of inflation from workers to employers is a scandal, according to them.

But as inflation increased, the union movement actually retreated from pursuing claims along these lines. In 2022 and 2023, there were very few examples of pay rises being won that matched or exceeded inflation. Some of the few in the private sector were from the offshore gas industry in Western Australia. The Offshore Alliance (the MUA and AWU) demonstrated that going straight for the jugular of major corporations can still win spectacular results.

The largest-scale recent example of a union winning an above-inflation wage result is the Victorian branch of the ANMF. Last May, a mass meeting of 3,000 union members employed in public hospitals unexpectedly rejected the government offer of 3 percent per year, along with the nebulous promise of a Fair Work Commission gender equity adjustment at some point.

Faced with the plausible threat of an industrial campaign waged by a large and very popular group of workers willing to defy their own leadership, the government caved in, granting the nurses a pay rise of 28.4 percent over four years. Shortly after, Ambulance Victoria staff won increases of 24-33 percent over four years, after a six-month industrial and political campaign.

It’s important to note that the real increase in nurses’ base rate of pay between 2021 and 2028 will total only a little more than 3 percent above inflation, if Reserve Bank inflation forecasts are correct. If we include increased allowances, this figure rises to between 6 and 8 percent ahead of inflation, over seven years. And this is meant to include a historic fix for more than a century of gendered underpayment of nurses too. Despite these limitations, the nurses’ 28.4 percent result has understandably become a benchmark for public sector wage claims more broadly.

But while Victoria’s Labor government may have crumbled at the plausible threat of a prolonged industrial campaign from rebellious nurses, it has refused to move far from its wages policy of 3 percent per year for other groups of workers, preferring to tough out prolonged but low-intensity industrial campaigns. Last month, public mental health workers voted to accept a union leadership recommendation to settle for a deal far short of the initial claims rather than escalating the industrial campaign. Thirty-eight percent voted against acceptance, but to win against a government digging in its heels will need a much more vigorous industrial campaign, one capable of creating a crisis for the government.

Outside of Victoria, one of the few other high-profile examples of a successful fight for above-inflation pay rises is government teachers in NSW, who in late 2023 won an immediate pay rise of between 8 percent (for top of scale teachers) and 12 percent (for graduate teachers). This followed a lengthy industrial campaign under the previous Liberal government, and the teachers’ rejection of a pathetic 2.5 percent offer from the incoming Minns government. This is a significant result, though the NSW teachers’ 2024 pay deal was only 3 percent per year over three years.

The failure of most unions to pursue wage rises aggressively is painfully squeezing household finances. Added to this, many essential industries—including health care, education and community services—struggle to retain experienced workers because of punishing workloads and low wages, which jeopardises and threatens the many services working-class people rely on. Winning back the money lost to inflation matters: it can be the difference between thousands of experienced staff staying in a vital industry, or being forced to look elsewhere for a living wage, intensifying the spiralling crisis in many essential services.

And whatever industry we’re in, the benchmark we set—by either accepting a massive hit to our pay or by fighting for a real pay rise—has the potential to demoralise or inspire others. Fighting is therefore not just about winning something for ourselves, but for every worker who deserves a pay rise.

A determined fight over wages can also be an important step to rebuilding the sort of unionism we need: the sort of unionism that used industrial action to win breakthroughs in pay, shorter hours, life-saving health and safety—and which didn’t stop there.

Historically strong unions like the Builders Labourers’ Federation, the metalworkers and the maritime unions all developed into powerful industrial units through fights over wages—and then used that industrial strength to fight for a better society, in dozens of different ways.

So why are there so few unions following this path today?

We know from ballooning corporate profits that the money is there. The precious few examples we have of workers fighting show that governments and corporations can be compelled to fund decent wages. We know from these same examples that to shake this money loose requires a serious industrial campaign, sometimes combined with the political pressure that strikes by groups like nurses, teachers and ambulance workers can create.

So the reason this is not being pursued on a wider scale is not that it is impossible. Rather, it’s a political choice. To put it simply: the majority of the leadership of the unions in Australia have a decades-long track record of pursuing a policy of class collaboration rather than conflict. The most notorious example of this is the Prices and Incomes Accord of the 1980s. Under this policy, union leaderships teamed up with a federal Labor government to impose industrial peace and wage restraint. Profit share rose while wages share declined—not by chance but as a matter of state policy, with the union leadership as active partners. With the active or passive assistance of almost all of the top union leaders, it was Labor that imposed the neoliberal agenda of privatisation, deregulation and booming corporate wealth that still plagues us today.

This important fork in the road for the Australian union movement wasn’t just a matter of industrial strategy. It was a political choice, one of prioritising the supposed “national interest” rather than the uncompromising pursuit of workers’ interests.

The politics of the union movement’s leadership hasn’t improved since that time. It’s notable that in countries where neoliberalism was imposed by conservative forces such as Thatcher in the UK and Reagan in the US, this produced a somewhat more combative and oppositional legacy in some unions. Both of those countries had a notably higher level of strikes over the peak of the inflationary wave in 2022 and 2023—the UK recording ten times the decade-long average of strikes in those years—whereas the strikes over pay in Australia, while welcome, barely moved the statistical dial. The legacy of the class-collaborationist approach of the Accord is still entrenched in Australian unions.

There’s an obvious consequence of this for those who want our unions to take a different course: building a more combative union movement is a political project, not simply an industrial one. Of course we should be pushing our unions to fight to win back those missing tens of thousands of dollars. At the same time, we need a political strategy: one that rejects the politics of class collaboration, and instead sets out to rebuild the politics of class struggle. Pushing for higher wages has to be one part of this wider project.