Talk It Out

The Leadership debate - IR (un)truth test

As one might expect, in the leadership debate, Howard made a few claims about the IR "reforms". Lets examine the veracity of some of these claims, remembering of course that one does not need to tell an outright lie to be untruthful. For example, when Howard was asked whether, under his WorkChoices laws employees could be deprived of all their redundancy entitlements, he didn't tell an outright lie - he did not say "no". He also didn't tell the truth (ie "yes they can be and the so-called fairness test won't help them"), instead he launched into an irrelevant tirade about some old reforms to preserve entitlements of employees whose employer went into liquidation.

So what about some of the less obvious untruths? Let's take Howard's statement that Australia has the second highest minimum wage in the developed world. There are several ways that one could measure how high the minimum wage is. A raw dollar value is not particularly useful as the dollar will have different purchasing power in different countries. Wage adjusted for purchasing power ("purchasing power parity") is a better measure, as is percentage of average income.

Let's take a look at the OECD figures of minimum wage as a percentage of average income:

The first thing that is obvious is that in 2000 Australian minimum wage was indeed the second highest in the OECD. In 2006, this was no longer the case. While, at about 53% of the average wage, Australia's minimum wage is higher than the OECD average, it now ranks fifth, with NZ and Hungary following closely behind it. Another thing that cannot escape notice is that Australia is one of only 5 countries where the minimum wage has fallen vis a vis the average wage, and one of only 3 countries where this fall was quite significant. The other two countries are US (whose IR system Howard seems keen to emulate) and Mexico.

Lets look at the Purchasing Power Parity (PPP) adjusted wage:

It is the same story - Australia was second, or maybe even first, in 2000, but slipped to fourth place by 2006. Minimum wages have been getting lower, not higher under Howard government. 

If Howard had been truthful he should have said "in 2000 Australia had the second highest minimum wage in the OECD, however the last six years of my government saw a fall in the minimum wage, putting further pressure on low income families". But perhaps Howard wasn't trying to mislead - perhaps, as has been his habit, he was looking wistfully to the past rather than facing the present and planning for the future.

And while we are on the subject of the IR untruths. During the debate Howard told the nation that he believed unions had a legitimate role to play. This may have been comforting to those of us who don't think a teenager looking for her first job can effectively bargain with an employer, if it wasn't for Hockey saying completely the opposite just a few days earlier. In an interview on AM radio on the 18th of October Hockey stated that the role of unions in Australia is "essentially over". It is not quite clear whether it is meant to be a statement of fact or of Howard government aspiration, but it does not sit easily with Howard's statement in the Leadership debate.  

October 22nd, 2007 Posted by Unsilenced | Howard government, Industrial relations, Unions, Australian election, Minimum wage | 2 comments

A truly Minimum wage increase

The Australian Fair Pay Commission released its July 2007 wage decision (which will come into effect in October 2007). The summary of the decision can be viewed here. The Commission increased the federal minimum wage by a princely amount of 27 cents an hour for the workers on pay scales under $700 per week and by an even more "generous" 14 cents an hour for workers on pay scales over $700 per week. These increases add up to an extra $10.26 per week and $5.30 per week respectively, before tax.

For a worker on the minimum wage of $522.12 per week, this amounts to an increase of 2%. For a worker on a pay scale just under $700 per week, the increase is 1.5% and for a worker on a pay scale of above $700, the increase is less than 0.76%.  When you consider that the inflation rate is 2.4% and that the Commission will not issue another decision for a year, the lowest paid employees are sliding backwards - prices are increasing faster than their pay rates. At the time when the government attempts to dazzle us all with talk of economic prosperity, its dividends are not being shared equally - the poor are becoming poorer.

Let's compare this wage "increase" with the 6.7% increase scored by federal politicians some three weeks earlier. The same people who created a system that gives workers a pay rise less than the inflation rate obviously need considerably greater increases in their pay packets.

And if any further proof is needed that the minimum wage increase is a measly fob-off to ordinary workers - that proof is delivered by industry representatives' comments on the decision. When the ACCI and various industry bodies describe a wage increase as "moderate" or "fair and responsible", you know that the workers have been given a raw deal. 

Thanks for reading. 

July 5th, 2007 Posted by Unsilenced | Australian politics, Industrial relations, Business groups, Minimum wage, Poverty | no comments