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The Annual Wage Review is deliberately anti-democratic

Last week the Fair Work Commission (FWC) handed down a 3.75 % increase, starting from July 1st, for the national minimum wage (NMW) for 2023-4 and the minimum rates for all classifications in 121 industrial awards. About 2.5 million low-income workers are directly affected, and many others indirectly. The new national minimum wage will be $24.10 per hour; after tax that becomes $20.58. That after-tax outcome chases an inflation rate for low-income worker necessities above the official CPI at 3.5% and does not catch up with the real value of what has been lost since before the pandemic.

Also, this week we learned how an entirely different process delivered 11-14% increases to the executive employees who “manage” them. What does it mean that systemic pay increases for executive employees are reported AFTER the considerations that lead to the low-income pay rise?

The different processes, in effect, say that low-income wages are a serious problem for the whole of society, but high-income executive pay and profits are not. Before the decision, mainstream economists united to urge an increase of less than 4%.

So, for now, let’s put aside analysis of the decision itself to examine the Annual Wage Review (AWR) process that works against low-income workers.

Exclusion and alienation

The special feature of the AWR is how effectively low-income workers are excluded from the process that determines their living standards for the next 12 months.

Instead, high priests of arcane industrial law and mainstream, employer-protective economics – the FWC Panel, think tanks, employer and union advocates alike - pick over the innards of what low-income workers need relative to what their employers and “the society” need.

The starting assumption is that “what they need” is a potential threat to the good order of the law and the economy.

None of the inquisitors are elected to do what they do, except possibly some union officials.

In any society that claims “democracy” as its watchword this is just plain wrong.  

Overall, the modern union movement consents to it. There is no sign, yet, of any serious resistance to it or struggle for something different, except in the distant possibility of the new multi-employer bargaining arrangements.

A sketch of the process

There are two dimensions to the AWR process. One is governed by the statute law in the Fair Work Act (FWA) that requires and empowers the FWC to conduct an annual review of the NMW and award rates of pay. (The other is discussed below.)

Each year, in its decision, the FWC includes a good, somewhat technical, description of the law for the AWR (starting with paras 5,6,11). Sections 284 and 134 are the relevant sections.

The law enables submissions to the Review from interested parties (IPs) and sets limits on their participation. IPs can include employer organizations, unions – the Australian Council of Trade Unions (ACTU) or individual unions – unions not affiliated to the ACTU like RAFFWU, research think tanks, the Commonwealth and state governments, and individuals.

The most important dates are:

  • In December, the FWC announces the start of the Review and releases a draft timetable, the names of the FWC Panel that will run the Review and a research programme.

  • In March, the IPs present their first submissions; these are posted to the FWC website. These submissions usually include the % increase proposed by each IP.

  • Between March and May IPs can analyze each other’s submissions and the FWC Panel can highlight questions to the IPs they want answered.

  • In May, final submissions must be in and, as in this year, one day set aside for oral “consultation”.  

  • In June the FWC Panel announces its decision so that it can be implemented from July 1st.  

All the steps required by the law and associated information are published for public access at the FWC AWR web page.

Nothing in the law enables easy access to the process for low-income workers. For them, the process is unfriendly, to say the least.

For them, union members and non-members, everything depends on what the union movement does through the ACTU leaders and its affiliated unions.

They might learn in early March what the ACTU proposes for their pay increase through announcements by some union leaders and associated media commentary.

The content of submissions

The FWA strictly defines what the FWC Panel must “take into account” in running each Review and in turn the Panel applies that using its own values framework and beliefs about how the economy works. The framework assumes that low-income wages are a problem and must be controlled within certain limits. There is no such problem with profits.

Each final Decision carries a good technical summary of how the FWC Panel interprets each of the factors it is required to “take into account”. There are 7 of these described in the decision at paras 11,12,13, including:

3. Economic, labour market and business considerations: ss 134(1)(c), (d), (f) and

(h); ss 284(1)(a) and (b).

4. Relative living standards and the needs of the low paid: s 134(1)(a); s 284(1)(c).

5. Gender equality: s 134(1)(ab); s 284(1)(aa).

6. Job security: s 134(1)(aa).

7. Collective bargaining: s 134(1)(b).

Gender pay equality is the most recent, introduced by the Albanese Labor government in December 2022. That has not stopped the FWC from its own “go-slow” to give effect to its intentions.

A pro-employer economic framework that prevails in the FWCs thinking (point 3 above) can trump evidence that is offered in points 4 and 5 for example, and usually does.

The initial submissions for the March deadline are comprehensive, and quite technical. The ACTU submission is always thorough, running to over 150 pages and is a trove of useful information.

The submission proposes the desired increase (this year it was 5%, backed up by 9% for some workers to close the gender pay gap) and then explains in depth why it should be adopted.  

The ACTU submission might push a different interpretation of any of the legal factors for a better outcome for workers and that might run to several pages, legal citations, and economic data. There is precious little opportunity available or pursued for workers’ voices to be brought into the process.

There is no negotiation. Consultation is the watchword.

Industrial action during the process is restricted, even prohibitive, denying agency to low-income workers. Employers are free to withdraw capital or threaten to do so.

The technocratic boffins employed in or associated with the “interested parties” are in their own special paradise during the whole process.

Everything that is happening is a long way from the daily lives of low-income workers. The process is doing something for them and to them.

What this arcane process means: the second dimension

Everything is meant to induce resigned acceptance, no matter whether the result is “good” or poor. It can be argued the result is calculated to be “just good enough”, in its inadequacy, to soften worker or union disagreement.

This takes us to the second dimension of the process. That is the analysis, strategy and tactics of the employers, the unions, and perhaps other civil society organizations to deal with it. 

From the point of view of employers, the exclusion of low-income workers from genuine collective bargaining makes sense.

The prospect of low-income workers getting themselves organized through established unions or in other collective ways is against their priorities and their wishes. The process protects their interests.

Labor governments can, as this one does, submit somewhat vaguely that the FWC should not let wages fall below inflation, without putting a number to it, and thus present as a champion of low-income workers. If the decision matches that, they can seek support because they have done something tangible FOR those workers. Yet they have done nothing to enable the power of working people to intervene in a decision that is about their lives. They perpetuate the alienation and minimize stress on their relationship with employers.

Mostly, the modern union movement consents to and complies with the exclusion. Some pay little or no heed to it, comfortable in their enterprise bargaining stream.

Thus, the modern union movement believes that wage increases for low-income workers should be done by others to them and for them.

Low-income workers, men and women, are defined as incapable of personal and collective agency; not able to organize or be organized to work out their demands and demonstrate their willingness to support them.

The modern union denial of workers’ agency does not mean it does not care about low-income workers. The submissions and the advocacy show that they do.

The union movement does have a broad wage strategy, and that might have some positive spin-off for low-income workers.

First, the modern union movement prefers the “struggle” over pay, living standards and safety to stick to the law.

  • Enterprise bargaining based on productivity and competition requirements, including employer control over workers’ right to strike.

  • Lobbying and advocating for special case government support for otherwise neglected workers.

  • Lobbying the Labor government to amend the law to enable multi-employer bargaining, and gender equality, including improved possibility to close the gender pay gap.

  • New “multi-employer” bargaining.

  • Electoral campaigning support for the ALP.

Defiance, despite its great significance in the history of our movement, is discouraged.

Progress on these fronts is described as expressions of union power. And perhaps they are, as is shown quite well in this useful fact sheet produced by the ACTU.

But only 12% or so of workers are members of unions. And there is precious little sign of that being reversed. The current strategy, as summarized, is NOT working to reverse union density decline.

The proportion of the workforce engaged in enterprise bargaining is quite small. The proportion of those breaking through the legal restrictions to use their “withdrawal of labour” to get a strong result is small. Atomized disputes where that happens are elevated as major events showing the power of organized unions and the logic for union membership. Individual non-bargaining is widespread.

For the workers involved in an enterprise bargaining dispute, they are major events, but they are not in the sense that other workers can engage in industrial solidarity with them.

Isolated enterprise bargaining based on productivity to enhance competitive capability is the antithesis of real unionism.

So far, there is no sign the recent ACTU Congress decided to review or change this strategy. That would require a different consciousness in its own ranks.

Is there an alternative?

In brief, the answer is “yes”. A different strategy can be developed based on democracy and defiance and, above all, a profound belief in the potential of low-income workers to learn and realize their collective power. The strategy requires a trajectory of 3 or more years. 

The different strategy requires an annual set of different actions in which the latent power of low-income workers is nurtured and grown. Here are some ideas.

As early as possible (October) there could be a serious effort at a masses-oriented education programme about how the AWR fits in the struggle over living standards. This can start at a modest level but significantly more than what happens now. It would escalate year by year.

Essentially, by no later than early November, every union should seek the views of its low-income members, in the first instance, about what the union claim should be. Defiantly, it should be defined as a “claim” not a proposal. The discussion with members can and must be extended to low-income workers who are not yet members. Online communication makes this far more possible than many think. Deliberate, intended union growth is built in, and the trajectory of the struggle can attract it.

Union and ACTU preparations for the first submissions in March must include demonstrations of low-income workers in support of their claim. The primary purpose is to prepare for a second round of bigger demonstrations against the employers' “proposals” at a tactically suitable moment. Again, this second action lays the foundation for another suitable action further in the process. Each action can be planned to dovetail with appropriate multi-employer bargaining that might be underway.

The overall purpose is to enable the expression of low-income worker agency, consolidated in a new, democratic statutory framework.

The assumption each year is that it prepares for something bigger and more powerful the following year.

And it can start with “ordinary” union activists, if they believe in it, not wait for “leadership” to say “yes” or “no”. Our history is loaded with such stories, the ones that really made a difference.

Above all, it requires and means a bigger and stronger embrace of class solidarity, the expression of power that binds together the common experience of exploitation of all workers, no matter their identity.

 

 

 

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