Bigger pay rises likely from Labor’s new laws, but don’t spend them yet

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Likely, it’s all of them. But industrial relations settings – the rules of the game that determine how employers and employees come together to determine the price of labour – are also a key part of the story.

Beginning with the Hawke government’s Accord, the direction of public policymaking in Australia over the past few decades has been to shift power away from unions and limit wage increases.

There is likely to be an upside for some lower-paid workers following Labor’s new laws.Credit:James Davies

The Howard government’s championing of individual contracts versus collective agreements accelerated the trend. Howard’s unpopular WorkChoices regime was largely unwound by the Rudd and Gillard governments, of course. But little has been done in recent decades to seriously attempt to shift power back into the hands of workers.

Until now.

Only time will tell if Labor’s legislation, as drafted, delivers unions the power they need to push for bigger and multi-employer pay rises. Large concessions have been made. Smaller businesses with fewer than 20 staff will be exempt. Employers with up to 50 employees will have special provisions to wriggle out.

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It’s true employees of larger firms in low-paid industries, such as aged care and childcare, will get new powers to go on strike for better pay and conditions. But it remains to be seen if unionisation rates remain high enough in those industries to take up the cudgels of collective strike action.

When they do, it’s important to remember the employer in such cases is often the government itself, so any resulting higher wages bills will be paid for by taxpayers.

Whether multi-employer agreements are taken up across the wider economy, among retail and hospitality workers or other services industries for instance, remains to be seen. The civil construction sector has been expressly excluded.

Borland says it’s too early to quantify what effect Labor’s laws will have on wages, but suspects the direction will be upwards. “I think that’s the most plausible interpretation, but it’s so hard to say. No one should be thinking that they’re going to get a pay rise before Christmas.”

One thing is clear, however, Borland says, and that is the new laws do not, as some scaremongers argue, take Australia back to the 1970s and “pattern bargaining”, in which wage gains in one industry flow quickly into other industries through noisy demands for “comparative wage justice”.

Unionisation rates remain starkly lower than in the 1970s and the Fair Work Commission will hold significant sway in how it gives effect to the new laws.

The bottom line: there is likely to be an upside for some lower-paid workers in Labor’s new laws, but I wouldn’t bank that pay rise just yet.

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