Wage cuts are on the agenda whoever wins the election

13 May 2022
Tom Bramble

When all the bullshit about this election is cleared away, the contest comes down to a choice between two parties committed to cutting workers’ wages.

The announcement of a spike in inflation in the first quarter of this year has made clear that—as far as the Morrison government, the employer groups and the financial press are concerned—workers will cop the burden of rising prices in everything from rents and mortgages to food, public transport, energy and other household essentials.

For the past twelve months, most workers have suffered a real wage cut of 2 percent or more. Far from accepting that workers are entitled to be compensated for this with higher wages, the Morrison government and the bosses are demanding that the Fair Work Commission, which adjusts the federal minimum wage applying to well over two million of the lowest paid workers in the country, cut wages further in real terms.

In the face of 5.1 percent inflation in the year to March, and Reserve Bank predictions of 6 percent inflation this year, employer groups are arguing that the minimum wage should increase by around 3 percent. That’s a pitiful 61 cents on the current hourly rate of $20.33. The Restaurant and Catering Association and the Master Grocers (which cover FoodWorks, Spar and IGA stores) are even pushing for a wage freeze, that is, a five percent or more cut in workers’ living standards.

The Morrison government won’t put a figure in its submission to the Fair Work Commission, but it is stridently opposing Labor leader Anthony Albanese’s comment that Labor “absolutely” supports a rise in wages to keep pace with inflation. “It is like throwing fuel on the fire of rising interest rates and rising cost of living”, Scott Morrison says. Such “thoughtlessness will actually make inflation worse”.

The Financial Review is running daily stories claiming that Labor’s support for a 5.1 percent pay increase would “crush business”. Indeed, according to ANZ senior economist Catherine Birch, any increase in wages above the average of 2.5 percent in recent years would stoke inflation even if it still represented a cut in real wages.

The Reserve Bank has warned of a “wage-price spiral” like the 1970s. But no-one—not the Reserve Bank, not the bosses’ organisations, not the Morrison government, not the Financial Review—is even claiming that the surge in inflation has anything to do with wage increases at all! Their objection is to workers’ living standards being protected. When big business profits are going through the roof and when the incomes of people in Toorak and Double Bay are surging, it’s a “healthy economy”. When workers get more, it’s dangerous or reckless. That’s because “the economy” is meant to serve their needs, not ours.

This is naked class war being waged by the bosses and their representatives. Those benefiting from an increase in the minimum wage are overwhelmingly the low paid doing some of the most valuable work in our society. They are the cleaners, the retail workers, the hospital orderlies, the hospitality workers, the care workers, all the people who got us through the pandemic and who keep society running every day. Many are women and the sole- or main-income earner in their household. Many have already been hit in recent years by cuts to penalty rates.

The bosses are saying that these workers are not worth a wage rise of even a dollar an hour, which would lift their hourly wage to a measly $21.37. The people who shuffle paper around all day contributing nothing to society, but whose fortunes are currently ballooning, reckon that workers getting a weekly wage of $812 will kill the economy.

The politicians are no better. Scott Morrison reckons it’s irresponsible to lift wages a few cents when his most recent annual pay rise of $10,000 pushed his yearly salary to $550,000! Workers on the minimum wage get less in a day than the daily meal allowance paid to parliamentarians.

Labor is trying to come across as a white knight riding in to save workers. But Labor too is for wage cuts. Albanese initially said that he supported wages rising in line with inflation and that Labor might make a submission to the Fair Work Commission to that effect, reversing the party’s longstanding policy of leaving the decision to the so-called neutral umpire, in reality a court stacked with bosses’ representatives.

But in the face of the bosses’ opposition, Albanese went to water. Within a couple of days, he had backtracked. No, Labor would not definitely be making a submission to the Commission if it won government. No, Labor would not support the minimum wage rise flowing through to all 2.7 million on awards, just the 184,000 workers on the very bottom rung. No, Labor would not be backing the ACTU’s claim for a 5.5 percent wage rise (an increase of $1.12 per hour) since it was above inflation. It quickly became clear that, far from supporting the maintenance of the real wages, Labor too was committed to cutting them.

It is not as if this should be news. Labor state governments have been cutting public sector wages for years through a combination of wage freezes, “pauses” and wage caps set as low as 1.5 percent.

An Albanese Labor government could pass legislation directly lifting the minimum wage. But Albanese refuses to do this. He refuses to reinstate penalty rates that were cut in 2015. He refuses to give trade unions more powers to strike for higher pay. He refuses to lift JobSeeker and Youth Allowance. And while refusing to back a decent wage rise for millions of workers Labor is committed to $185 billion in income tax cuts, the big majority of which will go to those on taxable incomes of more than $120,000 a year.

Labor can get away with its terrible pro-boss policies cutting wages because the trade unions allow it to. Telling the truth about the ALP and explaining that we can’t look to Labor to save us would undermine the unions’ strategy of uncritically tailing Labor. Whoever wins this election, workers face years of wage cuts unless they fight.

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