tag:theconversation.com,2011:/au/topics/industrial-relations-in-the-2019-election-70481/articlesindustrial relations in the 2019 election – The Conversation2019-07-01T07:40:06Ztag:theconversation.com,2011:article/1195942019-07-01T07:40:06Z2019-07-01T07:40:06ZPolitics with Michelle Grattan: ACTU president Michele O'Neil on John Setka and the government’s anti-union legislation<p>The ACTU leadership has pushed controversial construction boss John Setka to quit his union job but its president Michele O'Neil says the final decision on his leadership rests on the union membership. </p>
<p>She told The Conversation “members of unions elect their leadership and that’s an important principle”. </p>
<p>In this podcast episode O'Neil denounces the government’s plan to bring back to parliament the Ensuring Integrity Bill - which would give the government greater power to crack down on union lawbreaking - saying it is a “very extreme and dangerous bit of law”. </p>
<p>“It is not about integrity, it’s a political attack,” she says, citing the ability of banks and politicians to adopt voluntary codes of practice.</p>
<p>O'Neil is highly suspicious of Scott Morrison putting industrial relations back on the policy agenda, with a review now in train, to which the unions, unlike business, haven’t yet been invited to contribute. But she flags they will strongly argue their case over coming months, saying “we’ve written to Christian Porter asking why he hasn’t asked to meet with us…[this] won’t stop us advocating and putting forward what we think because it’s important for workers”. </p>
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<h2>Additional audio</h2>
<p><a href="http://freemusicarchive.org/music/Lee_Rosevere/The_Big_Loop_-_FML_original_podcast_score/Lee_Rosevere_-_The_Big_Loop_-_FML_original_podcast_score_-_10_A_List_of_Ways_to_Die">A List of Ways to Die</a>, Lee Rosevere, from Free Music Archive.</p>
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<p>AAP/PETER RAE</p><img src="https://counter.theconversation.com/content/119594/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>ACTU President Michele O'Neil says that the decision over Setka's leadership lies with the union membership, and denounces the government's plans to bring back anti-union legislation.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1194682019-06-27T12:03:21Z2019-06-27T12:03:21ZGrattan on Friday: Folau affair shows Morrison heading into religious freedom morass<p>Scott Morrison is riding high after his “miracle” win, but that will be just a memory come the next election due in early 2022. It’s what he does from now on that will determine whether the Coalition can secure a fourth term.</p>
<p>Morrison got himself elected with tax, written in capital letters, on an otherwise largely blank page. Moreover, given he was in campaign mode from the day he replaced Malcolm Turnbull, it was hard to get a feel for how he would operate as a prime minister off the (immediate) election trail.</p>
<p>More than a month into the new term, we are seeing the first outlines of Morrison’s approach and priorities. Central to it are outcomes and what some dub “achievables”.</p>
<p>Christopher Pyne once famously described himself as “a fixer” (in his case, something of a misnomer). At the centre of how Morrison sees running government is fixing things, oiling the tracks, if you like - whether this is in service delivery (such as improving the way the National Disability Insurance Scheme works), the approval processes for getting big projects underway (regulatory “congestion busting”), or smoothing the operation of the industrial relations system.</p>
<p>He’s lectured public service chiefs about the importance of delivery, and appointed Stuart Robert to a new services portfolio, based on Service NSW (which aims to “simplify the way customers do business with government” and has generated a high level of satisfaction from those using it).</p>
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<p>In general, the signs are that Morrison is focused on government in terms of managing, as well as on responding to what he judges the public want, especially his “quiet Australians” in that public.</p>
<p>Ears pricked this week when he put more industrial relations reform on the table, beyond the fresh attempt that will be made to secure passage of the Ensuring Integrity legislation.</p>
<p>The new industrial relations minister, Christian Porter, is to conduct a review running until the end of the year or beyond, and businesses are being encouraged to bring forward their suggestions.</p>
<p>But, at least from what’s being said now (things can always change), this is not a frolic towards a new “WorkChoices” destination. The attention is especially on administration, for example dealing with the blow out in the time taken to approve enterprise agreements, and on seeking information.</p>
<p>The focus on management reflects and fits with Morrison’s relatively non-ideological belief system. But amid this pragmatic, even low key, approach to governing, Morrison is committed to dealing with one highly charged values issue - protecting religious freedom.</p>
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<a href="https://theconversation.com/morrison-wants-to-unleash-economys-animal-spirits-and-foreshadows-new-look-at-industrial-relations-119289">Morrison wants to unleash economy's 'animal spirits' and foreshadows new look at industrial relations</a>
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<p>Turnbull bequeathed this hornets nest to his successor. The then prime minister set up an inquiry, led by a former Howard government minister Philip Ruddock, to appease the right, those on the losing side in the same-sex marriage fight. The subsequent report recommended a religious discrimination act.</p>
<p>The case of Israel Folau, turfed by Rugby Australia following his homophobic Instagram post based on the bible, has injected a huge amount of heat into an issue already fraught. That intensified this week when GoFundMe removed from its site Folau’s appeal to finance legal action against Rugby Australia. If intensity can be measured in dollars, the Folau campaign has so far raised more than $2 million.</p>
<p>When Turnbull set up the inquiry, he was seeking to throw a blanket over a matter dividing his party. Inevitably there would be a day of reckoning and, as bad luck would have it, the Folau imbroglio has widened the debate, which formerly had centred primarily on religious institutions, particularly schools.</p>
<p>The issue falls into the category of what political scientists label “wicked problems”. There is no easy or satisfactory path through a maze of conflicting rights.</p>
<p>Some in the government try to push aside the Folau case, saying it is just a matter of his contract. But if the aim of legislation is to prevent a person being discriminated against on the basis of their religion, wouldn’t this logically mean bans on contracts stipulating employees can’t spruik certain religious beliefs? And if not, where does that leave the Folau backers?</p>
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Read more:
<a href="https://theconversation.com/why-the-israel-folau-case-could-set-an-important-precedent-for-employment-law-and-religious-freedom-118455">Why the Israel Folau case could set an important precedent for employment law and religious freedom</a>
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<p>It’s notable that a couple of netball corporate sponsors bought into the affair, after Folau’s netball-playing wife shared his post asking for funds. They immediately came under attack, including from the former head of the Human Rights Commission, Gillian Triggs, who condemned such “bullying”.</p>
<p>Modern companies are increasingly sensitive to the cultural changes in society over recent years, as we saw in the interventions by some businesses in the same-sex marriage debate.</p>
<p>The merging of the commercial and the moral (which has outraged for example Home Affairs minister Peter Dutton) can be viewed in “market” terms. While in certain cases a company’s positioning may be driven by the personal values of its leadership, more generally many companies, and organisations like Rugby Australia, will want their “brands” in line with what they see as their customers’ likely values.</p>
<p>Religious freedom, in a pure form, can run up against companies’ rights to embrace values, just as their actions – in terms of restrictions they may seek to impose on their employees - can circumscribe free speech.</p>
<p>Morrison, who is deeply committed to his Pentecostal faith and thinks there should be more protection for religious freedom, may be starting to realise just what he could be getting into. Asked this week whether he supported the GoFundMe decision, he said “I think that issue has had enough oxygen”.</p>
<p>Some in government are viewing this in partisan terms, believing they can wedge Labor. After the election Chris Bowen, who is from western Sydney with its high ethnic populations, highlighted that it had been raised with him that “people of faith no longer feel that progressive politics cares about them”. In government eyes, the ALP could be wedged every which way on religious freedom legislation, caught between conservative (often ethnic) supporters and progressives.</p>
<p>That may be. But it is also possible a rift could open in Liberal ranks too, between conservatives and moderates, each tapping into sections of the community.</p>
<p>The risk for Morrison is that the debate becomes a distraction, a noisy and divisive intrusion into what he wants to be a steady-as- she-goes style of government.</p><img src="https://counter.theconversation.com/content/119468/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Scott Morrison won his ‘miracle’ election but what he does from now on will determine whether the Coalition can secure a fourth term.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1192892019-06-23T19:56:55Z2019-06-23T19:56:55ZMorrison wants to unleash economy’s ‘animal spirits’ and foreshadows new look at industrial relations<figure><img src="https://images.theconversation.com/files/280837/original/file-20190623-61751-1ozfc93.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Prime Minister Scott Morrison will lay out economic policies "to get Australians off the economic sidelines and on the field again" on Monday. </span> <span class="attribution"><a class="source" href="https://photos.aap.com.au/search/20190613001404119623">Dean Lewins/AAP</a></span></figcaption></figure><p>Scott Morrison will commit to getting consumers, business and investors “off the economic sidelines and on the field again” in his first major domestic speech of the new term.</p>
<p>Addressing a business audience in Perth on Monday, Morrison will set out the government’s economic priorities for the next few months, including delivering its tax plan when the new parliament meets, and “provoking the ‘animal spirits’” in the economy by removing regulatory and bureaucratic barriers to investment.</p>
<p>He will also foreshadow a new look at industrial relations reform while stressing that it must benefit both employers and employees.</p>
<p>Acknowledging the challenges and headwinds affecting the Australian economy, which registered low growth in the latest national accounts, Morrison will say political uncertainty in the election run up weighed on the confidence of consumers, businesses and investors. This saw them “sitting on the sidelines” until it was over.</p>
<p>“Our job post election is now very clear – to get Australians off the economic sidelines and on the field again.”</p>
<p>With shadow cabinet on Monday discussing the opposition’s position on the Coalition’s three-stage decade-long tax package, Morrison will seek to increase pressure on Labor to pass all stages, saying the plan doesn’t just have a strong political mandate but also “a compelling policy rationale”.</p>
<p>The first stage will boost consumption and be equivalent to at least two 25 basis point interest rate cuts, he says in his speech, released ahead of delivery.</p>
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<a href="https://theconversation.com/frydenberg-declares-tax-package-must-be-passed-in-its-entirety-117768">Frydenberg declares tax package must be passed 'in its entirety'</a>
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<p>Labor agrees with stage one but is yet to decide whether it will wave through the second and third stages, both due to start after the next election. It has been particularly critical of stage three, which delivers to the highest income earners. The government says it won’t split the bill, which will be introduced when the new parliament begins next week.</p>
<p>While some in Labor believe it should pass the whole package, others argue it is irresponsible to commit to tax cuts years out in uncertain times.</p>
<p>Shadow treasurer Jim Chalmers, interviewed on the ABC, reiterated on Sunday that Labor wanted to know how the third stage – worth $95 billion of the $158 billion package – was distributed through the various tax brackets. He said Labor’s highest priority was to get the first stage flowing through the economy, while the government’s highest priority seemed the third stage which didn’t come in for another five years. </p>
<p>But Morrison says in his speech: “It still baffles me why Labor can readily sign up to spending schemes that run for decades, yet cannot do the same to let Australians keep more of their own money.</p>
<p>"Under our changes, from 2024-25, 94% of Australians will pay a maximum marginal tax rate of no more than 30 cents in the dollar, compared to only 16% if stages two and three are not delivered.</p>
<p>"Or to put it another way, almost 80% of hard working Australians will keep more of what they earn following stages two and three of our tax plan.”</p>
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<a href="https://theconversation.com/the-reserve-bank-will-cut-rates-again-and-again-until-we-lift-spending-and-push-up-prices-118263">The Reserve Bank will cut rates again and again, until we lift spending and push up prices</a>
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<p>Morrison says that to provoke the “animal spirits” in the economy, regulatory and bureaucratic barriers to business investment must be removed.</p>
<p>This requires “reducing regulatory barriers to growth and driving improvements in industrial relations that improve outcomes for both workers and businesses”.</p>
<p>“Congestion is not just on our roads and in our cities. We also need to bust regulatory congestion, removing obstacles to business investment,” he says, instancing the experience of the mining industry in Western Australia.</p>
<p>“In 1966, the late Sir Arvi Parbo took the Kambalda nickel mine near Kalgoorlie from discovery to operation in 18 months. By contrast, the Roy Hill iron ore mine took around 10 years to complete around 4,000 approvals. Delays to the project meant delays to over 5,000 construction jobs and 2,000 ongoing jobs.</p>
<p>"There is a clear need to improve approvals timeframes and reduce regulatory costs, but in many cases regulators are making things worse.</p>
<p>"Look at the WA Environment Protection Authority and the uncertainty it has created over new emissions requirements for the resources sector. Business will also make valid criticisms of many Commonwealth agencies and departments.”</p>
<p>Morrison is appointing his close confidant Ben Morton, from WA, who is Assistant Minister to the Prime Minister, to work with him, Treasurer Josh Frydenberg and other ministers “to tackle the full suite of barriers to investment in key industries and activities”.</p>
<p>The government will focus on regulatory reform “from the perspective of a business looking, say, to open a mine, commercialise a new biomedical innovation, or even start a home-based, family business.</p>
<p>"By focusing on regulation from the viewpoint of business, we will identify the regulations and bureaucratic processes that impose the largest costs on key sectors of the economy and the biggest hurdles to letting those investments flow.</p>
<p>"What are the barriers, blockages and bottlenecks? How do we get things moving?</p>
<p>"Step one is to get a picture of the regulatory anatomies that apply to key sectoral investments. Step two is to identify the blockages. Step three is to remove them, like cholesterol in the arteries.”</p>
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Read more:
<a href="https://theconversation.com/view-from-the-hill-to-whack-the-cfmmeu-morrison-needs-first-to-get-the-right-stick-102606">View from The Hill: To whack the CFMMEU, Morrison needs first to get the right stick</a>
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<p>Morrison will highlight the need “to protect investment from the impact of militant unions” and reaffirm that the government plans to try to get through the new parliament its Ensuring Integrity bill, that stalled in the last term. This would strengthen its hand against militant unions, notably the CFMMEU.</p>
<p>Beyond this, Morrison will say he has asked the new Minister for Industrial Relations, Christian Porter “to take a fresh look at how the system is operating and where there may be impediments to shared gains for employers and employees. </p>
<p>"Any changes in this area must be evidence-based, protect the rights and entitlements of workers and have clear gains for the economy and for working Australians.”</p><img src="https://counter.theconversation.com/content/119289/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In his first major domestic speech since the election, Prime Minister Scott Morrison will lay out economic policies “to get Australians off the economic sidelines and on the field again”.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1175832019-05-22T19:48:29Z2019-05-22T19:48:29ZWhere to now for unions and ‘change the rules’?<p>Very few people saw the Coalition’s win coming. If it was, as opposition leader Bill Shorten contended, “a referendum on wages” then it follows that Australians were content with sluggish wage growth and didn’t want a more substantial pay rise.</p>
<p>But that would be a great oversimplification. Labor had a more ambitious program of workplace reform, part of a much wider agenda for economic change and wealth redistribution, that it simply couldn’t sell to the electorate.</p>
<p>Where does this leave the industrial wing of the labour movement, which pushed the Labor Party to adopt sweeping re-regulation of the labour market?</p>
<p>For two years through its “change the rules” campaign the Australian Council of Trade Unions has had remarkable success in entrenching in public consciousness the twin themes of wage theft and insecure work.</p>
<h2>Broken rules on repeat play</h2>
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<p>It seemed to have a deliberate strategy of repeating its talking points and examples to reinforce the view that something is “broken” and needs to change.</p>
<p>But it provided very little detail about the type of change it wanted. </p>
<p>Whether it should have provided more or less detail is now very much up for debate as it and the Labor Party try to work out what went wrong on Saturday.</p>
<p>Rather than getting what they wanted, they are both on the defensive. Already business groups are weighing in, urging the Morrison government to “simplify” the industrial relations system and prevent casual workers from “double-dipping” – obtaining both a casual loading and leave entitlements.</p>
<p>Harvey Norman executive chairman Gerry Harvey put it this way on Monday, perhaps revealing something about <a href="https://www.afr.com/news/politics/national/relieved-ceos-have-a-busy-agenda-for-morrison-20190518-p51oso">how he sees his workforce</a>: “The economy works best when all the little ants out there are left to get on and do great things.”</p>
<h2>Now it’s up to the Coalition</h2>
<p>The Coalition did not advocate workplace law changes in the election campaign. It gained a mandate to do no more than implement the recommendations of the <a href="https://docs.jobs.gov.au/documents/government-response-migrant-workers-taskforce-report">Migrant Workers Taskforce</a> which it accepted back in March. As it happens, they are mostly worker-friendly measures directed at systemic underpayment and other forms of exploitation.</p>
<p>However, given the pressure that is already coming from the business community, don’t be too surprised if the Government dusts off some of the recommendations of the Productivity Commission’s 2015 <a href="https://www.pc.gov.au/inquiries/completed/workplace-relations#report">inquiry into workplace relations</a>.</p>
<p>These include “enterprise contracts” that allow businesses to vary award terms, and a relaxation of the “better off overall test” for enterprise agreements.</p>
<p>The Australian Building and Construction Commission and Registered Organisations Commission will remain in place as “cops on the beat” to combat union power, probably with increased resources.</p>
<h2>Unions have a choice of strategies</h2>
<p>So what room is there for unions in the new environment? In my view, plenty. The deep problems that “change the rules” and Labor’s policies sought to address haven’t gone away.</p>
<p>We still have a culture of wage theft in many sectors of the economy. We still have a proliferation of dodgy labour hire contractors. We still have misuse of the labour hire business model at companies like Amazon, with many workers trapped in long-term casual engagement. We still have widespread use of rolling fixed-term contracts.</p>
<p>We still have the collapse of effective collective bargaining in much of the private sector, and employer ‘work-arounds’ to avoid negotiating an enterprise agreement or get out of an existing one. We still don’t have the basis for a proper living wage.</p>
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<a href="https://theconversation.com/how-the-major-parties-stack-up-on-industrial-relations-policy-116256">How the major parties stack up on industrial relations policy</a>
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<p>As the results unfolded ACTU secretary Sally McManus has <a href="https://twitter.com/sallymcmanus/status/1129892454868574208">made it clear</a> that the union movement would “never give up, never stop fighting for fairness for working people”. That said, it will doubtless revisit the change the rules campaign and its accompanying communications and electoral strategies.</p>
<p>Rather than shrinking back to a “small target”, as Labor is now contemplating in some policy areas, I think the ACTU should consider remaining bold in its vision for workplace reform.</p>
<p>It could prepare a clearly articulated case for “changing the rules” using detailed research that precisely measures the extent of problems employers like to downplay such as insecure work and wage theft.</p>
<p>And it should outline precisely how it wants the rules changed and what those changes would do to working lives.</p>
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Read more:
<a href="https://theconversation.com/why-are-unions-so-unhappy-an-economic-explanation-of-the-change-the-rules-campaign-105673">Why are unions so unhappy? An economic explanation of the Change the Rules campaign</a>
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<p>Of course, campaigning for legal changes can only be one part of the unions’ playbook.</p>
<p>Organising and connecting with workers on the ground in new and innovative ways is also essential, as shown by the United Voice’s new digital union [Hospo Voice] which campaigns against wage theft and sexual harassment in the hospitality industry and the <a href="http://www.youngworkers.org.au/">Young Workers Centre</a> and <a href="https://www.migrantworkers.org.au/">Migrant Workers Centre</a> which are one-stop shops run by the Victorian Trades Hall Council.</p>
<p>As the National Union of Workers and United Voice put it in the context of their <a href="https://anewunion.org.au">current amalgamation proposal</a>: “we need to change the rules, but we also need to change the game”. </p>
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<p><em>Anthony Forsyth blogs on workplace issues at: <a href="https://labourlawdownunder.com.au/">labourlawdownunder.com.au</a></em></p><img src="https://counter.theconversation.com/content/117583/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anthony Forsyth has received research funding from organisations including the Business Council of Australia, the Construction, Forestry, Mining and Energy Union, the Fair Work Commission and Victorian Government. The views expressed in this article are his own.</span></em></p>Dealing with the Coalition will more difficult than arguing than the rules are wrong.Anthony Forsyth, Professor of Workplace Law, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1154632019-05-09T20:07:00Z2019-05-09T20:07:00ZGiving workers a voice in the boardroom is a compelling corporate governance reform<figure><img src="https://images.theconversation.com/files/272959/original/file-20190507-103049-1c9b9zx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The German model of balancing shareholder interests on company boards with worker representatives is again attracting interest in the US, Britain and Australia.</span> <span class="attribution"><span class="source">Shutterstock.com</span></span></figcaption></figure><p><em>This article is part of an election series on wages, industrial relations, Labor and the union movement ahead of the 2019 federal election. You can read other pieces in the series <a href="https://theconversation.com/au/topics/industrial-relations-in-the-2019-election-70481">here</a>.</em></p>
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<p>Australia’s prime minister, Scott Morrison, has warned that the head of the trade union movement, Sally McManus, will “be a board member, figuratively” of every single company should he lose the election.</p>
<p>If he’s spooked by a figurative trade unionist, how might he feel about thousands of employee-elected and union-nominated directors serving on every company board?</p>
<p>The Australian Council of Trade Unions passed a motion at its national congress last year urging a future <a href="https://www.actu.org.au/media/1034013/worker-representation-on-boards-awu.pdf">Labor government</a> to “implement a policy of installing employees on company and government managed boards”. </p>
<p>Labor’s <a href="https://www.alp.org.au/media/1539/2018_alp_national_platform_constitution.pdf">own platform</a> says it will examine measures “including worker representation on boards, giving consideration to global models currently in operation and any practical pathways that could lead to their adoption”. </p>
<p>Worker representatives on company boards is also on the agenda in other parts of the English-speaking world. </p>
<p>In the US, <a href="https://www.vox.com/2018/8/15/17683022/elizabeth-warren-accountable-capitalism-corporations">Democratic presidential aspirant Elizabeth Warren</a> is pushing the idea for companies with a turnover of more than US$1 billion. In Britain, Conservative leader Theresa May raised the idea during her <a href="https://www.personneltoday.com/hr/theresa-may-promises-worker-representatives-boards/">2016 campaign to be prime minister</a> and the Labour Party has promised to make all organisations employing more than 250 people give <a href="https://www.independent.co.uk/news/uk/politics/jeremy-corbyn-workers-boards-labour-conference-one-third-union-a8550946.html">a third of board positions</a> to worker representatives (along with other <a href="https://www.theguardian.com/politics/2018/sep/23/labour-private-sector-employee-ownership-plan-john-mcdonnell">employee ownership measures</a>).</p>
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<a href="https://theconversation.com/how-britain-could-benefit-by-bringing-workers-into-the-boardroom-66693">How Britain could benefit by bringing workers into the boardroom</a>
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<p>It’s an idea that is neither new nor particularly radical. Worker representation on boards has been a feature of Germany’s corporate landscape for decades. The model was once considered so successful that Australia, Britain and the US were <a href="https://www.tandfonline.com/doi/abs/10.1080/13619462.2015.1061941">all close to doing the same</a> in the 1970s. </p>
<p>Then the idea fell out of fashion. Now it’s back in vogue, in part because of recognition that the current system of governance, in which board directors are appointed to represent shareholders’ interests, is <a href="https://theconversation.com/treasury-admits-corporate-governance-is-broken-but-baulks-at-systemic-fixes-100882">broken</a>.</p>
<h2>Codetermination model</h2>
<p>Germany embraced <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1468-232X.2011.00639.x">employee-elected and union-nominated</a> representatives on company boards <a href="https://online.liverpooluniversitypress.co.uk/doi/abs/10.3828/hsir.2015.36.1">after World War II</a>. The system of “codetermination” initially applied only to the coal and steel sectors but spread to other areas. In 1976 legislation mandated that all companies employing more than 2,000 employees give workers equal representation on their supervisory boards.</p>
<p>Codetermination also gives employees the right to elect representatives to a “<a href="https://www.dw.com/en/representing-workers-the-german-way/a-41751752">works council</a>”, which represents their interests to management on operational issues.</p>
<p>What this means is that, whereas an Australian company generally has an all-powerful board of directors, the typical German corporate governance model involves at least three separate boards.</p>
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<p>There’s a supervisory board, representing both shareholders and workers. A management board, comprising senior management, is accountable to the supervisory board. Then there’s a works council, which oversees the implementation of employment laws and rights and negotiates with management over issues such as hirings and firings. </p>
<h2>A model to emulate</h2>
<p>Some regarded the embrace of the principles of industrial democracy with codetermination as a big part of the German economic miracle. By the early 1970s European neighbours such as Denmark, Sweden and Norway <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1467-8543.1976.tb00060.x">were adopting the model</a>. The European Union considered making it a common standard.</p>
<p>Australia, Britain and the US were <a href="https://www.tandfonline.com/doi/abs/10.1080/13619462.2015.1061941">also close to emulating</a> codetermination. But there was fierce pushback by employers and others committed to unfettered capitalism. Two economists associated with the Chicago School of Economics, Michael Jensen and William Meckling, confidently <a href="https://www.jstor.org/stable/2352442?casa_token=t5htOqFT5AQAAAAA:VO8KjRkAUrP56ep7WodorTCIYY4j-OTbxug6fvFYy1kHAiGG7qfXUBrL2i6acazsTAADlILdA9CvWWXzMvgska72qwUoVjzr6QAQdiaX1rKabmwiJiKodg&seq=1#metadata_info_tab_contents">predicted in 1979</a> that codetermination would lead to Germany’s economic collapse. </p>
<p>With the electoral victories of Margaret Thatcher and Ronald Reagan, the opportunity to adopt codetermination passed. </p>
<p>Union movements chose different paths to democratise their economies. In Australia, it was <a href="https://online.liverpooluniversitypress.co.uk/doi/abs/10.3828/labourhistory.112.0025">compulsory superannuation</a>. In the US, <a href="https://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?referer=https://scholar.google.com.au/&httpsredir=1&article=1050&context=lrr">employee share ownership plans</a>. In Britain, <a href="https://journals.sagepub.com/doi/abs/10.1177/0143831X8342003">the cooperative sector</a>.</p>
<h2>Renewed interest</h2>
<p>Now waves of corporate governance failures, not to mention the fact Germany’s economy has not collapsed, is rehabilitating codetermination.</p>
<p>It is increasingly recognised that our <a href="https://theconversation.com/britains-broken-corporate-governance-regime-38239">broken corporate governance system</a> – in which companies maximise shareholder profits at the expense of all other stakeholders – has contributed to wider economic underperformance, poor social outcomes and political instability.</p>
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Read more:
<a href="https://theconversation.com/solving-deep-problems-with-corporate-governance-requires-more-than-rearranging-deck-chairs-99297">Solving deep problems with corporate governance requires more than rearranging deck chairs</a>
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<p>The codetermination model offers a number of governance improvements. It requires thinking about a wider set of stakeholders. It increases accountability and oversight. It promotes cooperation. </p>
<p>This is not to say it solves all problems. Corporate governance failures can still occur, as in the case of <a href="https://www.spiegel.de/international/business/a-german-giant-in-decline-how-siemens-lost-its-way-a-915008.html">Siemens</a> and <a href="https://theconversation.com/what-we-can-all-learn-from-the-vw-emissions-saga-71264">Volkswagen</a>. </p>
<p>But <a href="https://www.emeraldinsight.com/doi/full/10.1108/01425450510612004">research</a> suggests employee directors and work councils do improve governance, and also help positively shape company strategy. Confounding the critics, there is certainly little evidence that promoting internal cooperation has impeded the competitiveness of the Germany economy. The nation is the world’s second-largest exporter of manufactured goods, after China. </p>
<p>That’s why prominent economists such as <a href="http://renewal.org.uk/articles/interview-inequality-and-what-to-do-about-it">Thomas Piketty are now saying</a> codetermination is a model worthy of emulation. To be truly effective, though, introducing codetermination in Australia will require rethinking our approach to other areas of worplace relations, such as <a href="http://www.oecd.org/social/oecd-employment-outlook-19991266.htm">enterprise bargaining</a> and vocational education and training.</p><img src="https://counter.theconversation.com/content/115463/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Warren Staples has received funding from Australia China Council, Department of Foreign Affairs and Trade (DFAT), and the Victorian Managed Insurance Authority (VMIA). Warren is currently a member of the Institute of Public Administration Australia (IPAA) Victoria’s Sustainability Community of Practice (CoP) Advisory Committee.</span></em></p><p class="fine-print"><em><span>Andrew Linden received funding from RMITs EU Centre to conduct his doctoral research. The Centre is funded by the European Union.</span></em></p>Putting employee directors on Australian boards is seriously back on the agenda for the first time since the 1970s.Warren Staples, Senior Lecturer in Management, RMIT UniversityAndrew Linden, Sessional Lecturer, PhD (Management) Candidate, School of Management, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1071392019-05-09T02:11:49Z2019-05-09T02:11:49ZUnions do hurt profits, but not productivity, and they remain a bulwark against a widening wealth gap<p><em>This article is part of an election series on wages, industrial relations, Labor and the union movement ahead of the 2019 federal election. You can read other pieces in the series <a href="https://theconversation.com/au/topics/industrial-relations-in-the-2019-election-70481">here</a>.</em></p>
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<p>Some advocates of laissez-faire capitalism argue that trade unions are bad for productivity. “With few exceptions,” according to one American economist, <a href="https://mises.org/library/how-labor-unions-hurt-workers">George Reisman</a>, “unions openly combat the rise in the productivity of labour.” </p>
<p>Other economists <a href="https://www.americanprogress.org/issues/economy/news/2008/12/09/5276/issue-brief-unions-are-good-for-the-economy-and-democracy/">disagree</a>. “Unionisation and high worker productivity often go hand-in-hand,” say <a href="https://www.americanprogress.org/about/staff/madland-david/bio/">Harley Shaiken and David Madland</a>. “Fairness on the job and wages that reflect marketplace success contribute to more motivated workers.” </p>
<p>So who’s right?</p>
<p>To answer this question, my colleagues Richard Freeman and Patrice Laroche and I <a href="https://www.routledge.com/The-Economics-of-Trade-Unions-A-Study-of-a-Research-Field-and-Its-Findings/Doucouliagos-Freeman-Laroche/p/book/9781138888302">surveyed the global evidence</a> from more than 300 studies on the economic impact of unionisation. </p>
<p>We conclude that unions do not, overall, reduce productivity, though it varies according to specific circumstances. </p>
<p>Unionisation does make businesses less profitable for the owners. But importantly, it also reduces income inequality, a useful social function given the problems that flow from a widening wealth gap. </p>
<h2>National differences</h2>
<p>Productivity refers to the efficiency of <a href="http://www.businessdictionary.com/definition/productivity.html">turning inputs into outputs</a>. It’s a key measure of economic performance. A nation’s productivity raises its per capita GDP.</p>
<p>The evidence from Australia is too thin to draw a credible conclusion (there are just <a href="https://theconversation.com/politicians-are-inflating-the-evidence-used-to-justify-tax-increases-89492">a handful of studies</a>), so our overall findings reflect evidence from other nations. </p>
<p>That evidence is mixed. In Britain, for example, union influence has reduced company productivity. In the US, unionisation appears to be associated with higher productivity in the construction and education sectors, but has made no difference in manufacturing. In developing countries, the overall effect is generally positive. </p>
<p>Such differences can be explained by variations in <a href="https://www.nber.org/papers/w13242.pdf">labour market institutions</a>. These include employment protections, minimum wages and unemployment benefits. Laws influence social attitudes, and vice versa, which in turn affect relative negotiating power and whether unions and employers value cooperation over conflict.</p>
<p>In theory, the more labour and capital cooperate, the more productive an enterprise is likely to be, providing higher wages and greater job security to workers and higher profits to shareholders. Less cooperation means lower productivity.</p>
<h2>Taking a share of profits</h2>
<p>The evidence shows unionisation is associated with lower profits, because unions secure higher wages and benefits for their members.</p>
<p>By reducing the profitability of an investment, unions may discourage further investment as owners of capital seek higher profits elsewhere. </p>
<p>Further, unions can hurt business when they exercise their power to disrupt (through strikes and other industrial action). <a href="https://theconversation.com/unions-part-of-the-solution-or-part-of-the-problem-37365">Union corruption</a> might also add to business costs.</p>
<p>But unions are by no means all bad for business. In representing worker interests, they can help make a company a more attractive place to work, <a href="http://psycnet.apa.org/doiLanding?doi=10.1037%2Fa0032380">reducing turnover</a> and increasing employees’ commitment to business success. Higher union wages and benefits also attract more job applicants, allowing management to select the best workers. </p>
<h2>But a benefit to society</h2>
<p>Most importantly, from a societal point of view, unions reduce pay inequalities. They increase the relative pay of <a href="https://books.google.com.au/books/about/What_do_unions_do.html?id=0f6hoLMTkjcC">lower skilled</a> workers. They help to establish <a href="https://journals.sagepub.com/doi/abs/10.1177/0003122411414817?journalCode=asra">pay norms</a> that extend beyond unionised companies.</p>
<p>Inequality is <a href="https://theconversation.com/dont-listen-to-the-rich-inequality-is-bad-for-everyone-81952">bad</a> for economic growth, because it discourages investment in education and innovation.</p>
<p>It is bad for democracy. It widens social divisions within societies and reduces <a href="https://www.jstor.org/stable/2586898?seq=1#metadata_info_tab_contents">participation</a> and political <a href="https://www.jstor.org/stable/25193796?seq=1#metadata_info_tab_contents">engagement</a>. It drives the <a href="https://www.cambridge.org/core/books/democracy-and-redistribution/ACB818ADD9174249D028E64634627626">rich to oppose</a> democratic reforms that might lead to <a href="https://www.cambridge.org/gb/academic/subjects/economics/public-economics-and-public-policy/economic-origins-dictatorship-and-democracy?format=HB&isbn=9780521855266">wealth redistribution</a>.</p>
<p>The increase in inequality in wealthy nations as union membership has declined over the past half century suggests unions are a pivotal institution for promoting equality. In OECD nations the average rate of unionisation was about 46% of the workforce in 1980. By 2015 it was 27%. </p>
<p>Meanwhile, the average income of the richest 10% of the population in OECD countries is about <a href="http://www.oecd.org/social/inequality.htm">nine times that of the poorest 10%</a> – up from seven times 25 years ago.</p>
<p>The trade-off of lower profits and reduced managerial autonomy, with managers forced to work harder as they negotiate and compromise with unions, should be considered a cost-effective price to pay relative to the long-term costs of rising inequality. </p>
<p>So Alfred Marshall, a founder of neoclassical economics, had a point when he said in 1890 that trade unions “<a href="https://www.routledge.com/The-Economics-of-Trade-Unions-A-Study-of-a-Research-Field-and-Its-Findings/Doucouliagos-Freeman-Laroche/p/book/9781138888302">benefited</a> the nation as well as themselves”.</p><img src="https://counter.theconversation.com/content/107139/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Chris Doucouliagos is affiliated with the National Tertiary Education Union. </span></em></p>The global evidence from more than 300 studies on the economic impact of unionisation shows unions do not, overall, reduce productivity.Chris Doucouliagos, Professor of Economics, Department of Economics, Deakin Business School and Alfred Deakin Institute for Citizenship and Globalisation, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1162722019-05-08T20:08:11Z2019-05-08T20:08:11ZLabor wants to pay childcare wages itself. A perfect storm makes it not such a bad idea<p><em>This article is part of an election series on wages, industrial relations, Labor and the union movement ahead of the 2019 federal election. You can read other pieces in the series <a href="https://theconversation.com/living-wage-and-fair-go-feasible-and-necessarythe-living-wage-the-fair-go-and-why-both-are-in-everyones-interest-116153">here</a>, <a href="https://theconversation.com/how-the-major-parties-stack-up-on-industrial-relations-policy-116256">here</a>, <a href="https://theconversation.com/labor-wants-to-restore-penalty-rates-within-100-days-but-what-about-the-independent-umpire-116154">here</a>, <a href="https://theconversation.com/if-labor-wins-the-2019-federal-election-what-role-will-unions-play-116653">here</a>, and <a href="https://theconversation.com/labor-wants-to-restore-penalty-rates-within-100-days-but-what-about-the-independent-umpire-116154">here</a>.</em></p>
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<p>Opposition Leader Bill Shorten <a href="https://www.billshorten.com.au/better_pay_for_early_childhood_educators_sunday_28_april_2019">has promised</a> that a Labor government will work to increase the wages of Early
Childhood Education and Care (ECEC) workers by 20% over eight years. That’s pretty conventional, but the method isn’t. </p>
<p>The government will directly fund the salary increases so that neither childcare providers nor parents bear the costs. These increases will be in addition to any changes to the award over these years. </p>
<p>Internationally, such interventions exist, but they’re rare. In Ontario, Canada, the government tops up the salaries of childcare workers <a href="https://news.ontario.ca/edu/en/2016/01/2016-wage-enhancement-for-early-childhood-educators.html">by $2 per hour</a>. For Australia, it’s a first.</p>
<p>Childcare workers are among the lowest-paid in the country, with more than 70% reliant on award rates that are not much higher than the minimum wage.</p>
<h2>The perfect storm of market failures</h2>
<p>There is also limited opportunity for career progression in childcare. These two facts combine to lead to an <a href="https://theconversation.com/low-paid-womens-work-why-early-childhood-educators-are-walking-out-91402">extraordinarily high turnover in staff</a>.</p>
<p>As long as legal minimum wages and awards are being met, the fact that a job is poorly paid isn’t normally enough to justify government intervention. </p>
<p>But childcare is a special case in which multiple market failures coincide.</p>
<p>“Market failure” is a term used to describe a situation economists like to believe is rare – where the workings of the free market lead to bad outcomes. Classic examples include polluting industries where the costs of pollution aren’t borne by the polluter itself (an “externality” in economics speak), and street lighting, for which it is impossible to charge users (economists call that a public good).</p>
<p>In economic theory, a market failure will at least justify the consideration of government intervention.</p>
<h2>Childcare’s benefits are direct, and indirect</h2>
<p>The provision of childcare creates both private benefits and public goods.</p>
<p>Mothers who can earn more than the cost of childcare benefit from it because they can maintain and build their skills and careers. Society also benefits because it makes better use of the skills of women.</p>
<p>There is also <a href="https://theconversation.com/research-shows-there-are-benefits-from-getting-more-three-year-olds-into-preschool-104416">clear evidence</a> that quality early childhood education positively affects the prospects of children for the rest of their lives, particularly those from low socioeconomic backgrounds. </p>
<p>It’s good for them and their families, but it’s also good for the entire community as those children are more likely to make full use of their skills and talents in later life and contribute productively to society. They are also less likely to engage in antisocial or criminal behaviour.</p>
<h2>Mothers can’t afford to pay good wages…</h2>
<p>But if entirely left to the market, childcare would only be affordable to those who earn high wages (and whose children might be the least likely to benefit). The total costs of the staff, venue, and administration needed to provide childcare are beyond most parents’ means.</p>
<p>This is why we already have government intervention in the form of means-tested assistance, which subsidises the cost of childcare up to A$10,190 per year, per child. </p>
<p>However, despite the existence of this subsidy, most Certificate III qualified childcare workers <a href="http://awardviewer.fwo.gov.au/award/show/MA000120#P279_28075">still only earn</a> about A$850 per week (A$44,000 per year), about half the average full-time wage. </p>
<p>Why aren’t they paid more, given that their work is so important?</p>
<h2>…in part because they don’t get good wages</h2>
<p>One answer could be that 96% of childcare workers are women, and about 95% of stay-at-home parents are women. The gender pay gap in Australia is currently <a href="https://www.wgea.gov.au/data/fact-sheets/australias-gender-pay-gap-statistics">about 14%</a>. It’s the result of a combination of gender discrimination, gender role expectations in child-raising, and relatively low pay in typically “feminised” industries.</p>
<p>It means mothers cannot easily afford to pay for proper childcare from their wages, and that childcare workers come to accept low pay.</p>
<p>Subsidising quality childcare through both a rebate to parents and a direct increase in childcare workers’ wages addresses these dual aspects of the gender pay gap by helping more mothers maintain careers (that will enable them get paid more) and acknowledging and addressing the extent to which the market <a href="https://www.dss.gov.au/our-responsibilities/communities-and-vulnerable-people/grants-funding/national-case-background">won’t pay childcare workers enough</a>.</p>
<h2>There’s a case for top ups, but they’re not ideal</h2>
<p>While Labor’s commitment to increasing childcare worker pay is welcome and is addressing an agglomeration of genuine market failures, a specific government top-up for a specific profession leave its workers vulnerable to a change of government policy that cuts or abolishes it.</p>
<p>The long-term solution is to do something more systematic about the undervaluation of care work in Australia. It would be best dealt with by adjusting how the Fair Work Commission sets award wages in light of the public value generated by the industry and an understanding of the historic undervaluing of work performed by women. </p>
<p>Labor has <a href="https://www.alp.org.au/policies/australian-women-labors-plan-for-equality/">announced</a> policies that aim to do this, so presumably this wage top-up is a stopgap that provides much-needed pay rises in the short term while longer-term solutions are being put in place.</p>
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Read more:
<a href="https://theconversation.com/why-labors-childcare-policy-is-the-biggest-economic-news-of-the-election-campaign-116441">Why Labor's childcare policy is the biggest economic news of the election campaign</a>
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<img src="https://counter.theconversation.com/content/116272/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Warwick Smith works part-time for Per Capita, a public policy think tank that receives money from philanthropic trusts, the National Union of Workers, the Community and Public Sector Union and the Australian Services Union.</span></em></p>Paying wages directly would be an Australian first, and far from ideal.Warwick Smith, Research economist, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1161542019-05-07T20:17:16Z2019-05-07T20:17:16ZLabor wants to restore penalty rates within 100 days. But what about the independent umpire?<p><em>This article is part of an election series on wages, industrial relations, Labor and the union movement ahead of the 2019 federal election. You can read other pieces in the series <a href="https://theconversation.com/living-wage-and-fair-go-feasible-and-necessarythe-living-wage-the-fair-go-and-why-both-are-in-everyones-interest-116153">here</a>, <a href="https://theconversation.com/how-the-major-parties-stack-up-on-industrial-relations-policy-116256">here</a> and <a href="https://theconversation.com/if-labor-wins-the-2019-federal-election-what-role-will-unions-play-116653">here</a>.</em></p>
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<p>Labor has promised to restore the penalty rates cut by the Fair Work Commission in its first 100 days.</p>
<p>From its point of view, as part of a broader attack on the Coalition’s record on industrial relations, wage stagnation, widespread wage theft and the growth of insecure work, it makes sense.</p>
<p>But it betrays a broader principle Labor holds dear - independence of the tribunal.</p>
<p>The Coalition is saying little about it – still spooked by the electoral poison wrought by its <a href="https://en.wikipedia.org/wiki/WorkChoices">WorkChoices</a> legislation more than a decade ago. </p>
<p>Throughout the campaign it’s been happy to fall back on claims about economic growth and tax cuts creating favourable conditions to lift wages generally.</p>
<p>So what did the Fair Work Commission decide about penalty rates back in 2017, and what has occurred since?</p>
<h2>The commission’s decision was limited</h2>
<p>The cuts to penalty rates are often discussed as if they applied across the board. They didn’t. The commission’s decision affected penalty rates in the federal awards applying to only six sectors: fast food, retail, hospitality, pharmacies, clubs and restaurants.</p>
<p>It determined that the penalty rates for working on public holidays in those awards would be reduced from July 1, 2017; and that the penalty rates for Sunday work in four of the awards would be phased down over four years. For example, full-time workers on the retail award had their Sunday rates cut from 200% of the normal rate to 195% in July 2017, then to 180% in July 2018, and were to have the cut to 165% in July this year, followed by a cut to 150% in July 2020.</p>
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<a href="https://theconversation.com/myths-about-penalty-rates-and-those-who-rely-on-them-49947">Myths about penalty rates and those who rely on them</a>
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<p>Extra payments for working irregular or unsocial hours are a longstanding feature of Australia’s industrial relations system. Traditionally, penalty rates have been included in awards with two objectives in mind: to compensate workers for having to work overtime or on weekends and public holidays, and to deter employers from requiring employees to work at these times.</p>
<p>However, in reaching its decision, the commission found that the deterrence objective was no longer relevant for public holiday or Sunday penalty rates. </p>
<h2>Sundays have become less sacred</h2>
<p>The finding followed a report of the the Productivity Commission that found that working on Sundays was far more common than it had been in industries such as hospitality, restaurants and retail. This reflected a broader shift to a “24/7 economy”.</p>
<p>In the Fair Work Commission’s word, the “disutility” endured by workers employed on Sundays was less than it was.</p>
<p>Labor and the union movement have strongly criticised the commission’s decision in the two years since it was handed down. Labor very quickly introduced a bill to override it and restore the penalty rates of the 700,000 affected workers. The government opposed it and a similar bill introduced by The Greens, enabling Labor and the unions to hammer the prime minister in the election campaign for “<a href="https://www.penaltyratesrecord.com/cook">voting eight times</a>” to cut penalty rates.</p>
<p>Labor has argued that over the recent ten-day Easter and Anzac Day break, the penalty rate cuts resulted in a loss of between <a href="https://www.billshorten.com.au/morrison_s_penalty_rate_cuts_leave_australian_workers_up_to_370_worse_off_over_easter_saturday_20_april_2019">$218 for a fast food worker and $369 for a pharmacy employee</a>.</p>
<p>The union/Labor-aligned McKell Institute says workers will be $2.87 billion worse off by the end of the scheduled reduction in penalty rate cuts <a href="https://mckellinstitute.org.au/app/uploads/McKell-Fork-in-the-Road-April-26-2019-.pdf">if the Coalition is re-elected</a>.</p>
<h2>But cutting penalty rates has created few jobs</h2>
<p>Business groups have long claimed that cutting penalty rates will boost employment levels, a position endorsed by both the Productivity Commission and Fair Work Commission. However, research published by the Australia Institute last year finds that the retail and hospitality industries were among <a href="http://www.tai.org.au/content/penalty-rates-and-employment-one-year-later">the lowest industries for job growth in the year after rates were cut</a>.</p>
<p>The Council of Small Business Organisations conceded two weeks ago that the cuts <a href="https://www.theaustralian.com.au/nation/politics/penalty-rate-cut-failed-to-create-one-new-job/news-story/4946a1915162c197a896063ae4009bb7">failed to create one new job</a>. Its chief executive, Peter Strong, said the impact had been minimal because it had coincided with above average increases in the minimum wage. </p>
<p>“There’s no extra jobs on a Sunday,” he was reported as saying. “There’s been no extra hours. Certainly, I don’t know anyone (who gave workers extra hours). It’s been just a waste of time.”</p>
<p>However, the Fair Work Commission is set up to be independent.</p>
<h2>Labor’s approach carries longer term risks</h2>
<p>A campaign spokesperson for the Liberal Party was quoted in the <a href="https://thenewdaily.com.au/news/election-2019/2019/04/22/penalty-rates-labor-liberal/">New Daily</a> last month saying: “‘Bill Shorten knows it is the independent Fair Work Commission that sets penalty rates, not the government. In fact, it was Bill Shorten … who set up the review into penalty rates. He even appointed the umpire.’” </p>
<p>The Coalition is gilding the lily. It has been no great defender of the industrial tribunal’s independence in the past. Under WorkChoices it sidelined the commission completely. Lately it has stacked the commission with employer representatives.</p>
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Read more:
<a href="https://theconversation.com/bill-shortens-promise-of-a-living-wage-is-both-realistic-and-necessary-but-its-not-enough-116153">Bill Shorten's promise of a living wage is both realistic and necessary. But it's not enough</a>
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<p>But it’s not a great idea to start overruling Fair Work Commission decisions that are unpopular. Yes, the penalty rate cuts are arbitrary, reducing the take-home pay of low-paid workers. But Australians have trusted the tribunal to make those judgment calls for more than 100 years. </p>
<p>If Labor wants to influence Fair Work Commission decisions, it should change the criteria used by the commission to review awards – it plans to do so as part of its promise to turn the minimum wage into a “living wage”.</p>
<p>Overturning decisions it doesn’t like will leave the Fair Work Commission wondering why it is bothering, and allow others to refuse to accept decisions they don’t like. And if Labor is elected and perseveres, it will also allow a less worker-friendly successor to overturn decisions it doesn’t like.</p>
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Read more:
<a href="https://theconversation.com/how-the-major-parties-stack-up-on-industrial-relations-policy-116256">How the major parties stack up on industrial relations policy</a>
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<img src="https://counter.theconversation.com/content/116154/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anthony Forsyth has received research funding from organisations including the BCA, CFMEU, Fair Work Commission and Victorian Government. He is a Consultant with Corrs Chambers Westgarth. The views expressed in this article are his own. Anthony blogs on workplace issues at: <a href="https://labourlawdownunder.com.au/">https://labourlawdownunder.com.au/</a></span></em></p>Overruling the Fair Work Commission will give Labor what it wants, at the cost of diminishing the commission.Anthony Forsyth, Professor of Workplace Law, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1162562019-05-06T20:35:07Z2019-05-06T20:35:07ZHow the major parties stack up on industrial relations policy<figure><img src="https://images.theconversation.com/files/272702/original/file-20190506-103071-1fkmsy4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">On industrial relations policy, the Coalition and Labor offer starkly different choices this election.</span> <span class="attribution"><span class="source">AAP/Nic Ellis</span></span></figcaption></figure><p><em>Today we kick off a four-part election series on wages, industrial relations, Labor and the union movement ahead of the 2019 federal election. You can read an analysis of Labor’s living wage policy <a href="https://theconversation.com/living-wage-and-fair-go-feasible-and-necessarythe-living-wage-the-fair-go-and-why-both-are-in-everyones-interest-116153">here</a>.</em></p>
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<p>Industrial relations is in the DNA of Australian politics: it is the defining policy issue that has traditionally distinguished Labor from the Coalition. </p>
<p>Industrial relations issues have featured prominently in recent election campaigns, with <a href="https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/rights-and-obligations/enterprise-bargaining">Australian Workplace Agreements (AWAs)</a>, <a href="https://www.abc.net.au/news/2016-03-16/jericho-10-years-on,-the-spirit-of-workchoices-still-lives/7248368">WorkChoices</a> and union governance being the subject of fierce contestation between the major parties. However, this election the policy contrast is especially evident. </p>
<p>While the policies of the major parties have always differed, over the past 30 years there was a neoliberal consensus on economic policy that in some respects extended to industrial relations. </p>
<p>For instance, the <a href="http://www8.austlii.edu.au/cgi-bin/viewdb/au/legis/cth/consol_act/fwa2009114/">Fair Work Act</a> implemented by the Rudd government reversed some but not all elements of Howard-era industrial relations policies. It largely maintained constraints on trade union power.</p>
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Read more:
<a href="https://theconversation.com/grattan-on-friday-unions-likely-to-be-more-challenging-for-a-shorten-government-than-boats-108771">Grattan on Friday: Unions likely to be more challenging for a Shorten government than boats</a>
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<p>But this consensus is fracturing, as reflected in the policy settings of the two major parties. The Coalition has held steadfast to the idea that industrial relations and labour market issues are best left to the logic of the market. From this perspective, a strong economy enabled by low taxation and minimal government intervention results in employment and wage growth.</p>
<p>In contrast, and in light of the evident decoupling of economic growth and wages growth, the ALP has taken a more interventionist stance. This reflects less confidence in market mechanisms alone to solve persistent issues such as gender inequality, low pay and the proliferation of precarious work.</p>
<h2>The Coalition’s commitments</h2>
<p>Much of the Liberal and National parties’ policy platform focuses on what the Coalition has achieved in office. Most prominent is the focus on the <a href="https://www.liberal.org.au/our-plan/economy">Coalition’s job record</a>, particularly its claim to have created 1.3 million jobs since it was first elected in September 2013. </p>
<p>The Coalition highlights recent job growth among younger workers, increased workforce participation among women and the creation of full-time jobs. This is despite persistent challenges relating to gender equality at work, unemployment and under-employment among young workers and a prevalence of insecure and non-standard work arrangements.</p>
<p>Very little is said explicitly about wages, job security and other “core” industrial relations issues. One explanation for this could be memories of the “WorkChoices election” of 2007 when the Howard government’s weakening of worker protections led to its removal from office.</p>
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Read more:
<a href="https://theconversation.com/grattan-on-friday-what-was-that-about-making-parliament-house-a-better-workplace-for-women-92691">Grattan on Friday: What was that about making Parliament House a better workplace for women?</a>
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<p>Or it could be because of an ideological view that removing market constraints, particularly for small business, will lead to improved conditions for workers. This is a strong theme in the Coalition’s platform: it claims that lower taxes are “a critical part of our plan to deliver a strong economy and record job creation”. </p>
<p>The Coalition also points to its record in “tackling union lawlessness”, particularly through the establishment of the <a href="https://theconversation.com/restoring-the-construction-watchdog-abcc-experts-respond-69643">Australian Building and Construction Commission</a>. A key aspect of the Coalition’s policy platform is to highlight Labor’s perceived weaknesses through its links with the union movement and also the potential impact of climate change policies on employment in carbon-intensive industries.</p>
<p>But it’s hard to see this resonating much among voters, who for the past two decades have seen unions are having much less power than big business (see below).</p>
<p><strong>Voters’ perceptions of the power of trade unions and big business, Australia, 1967-2016</strong></p>
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<a href="https://images.theconversation.com/files/272427/original/file-20190503-103053-t25lnp.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/272427/original/file-20190503-103053-t25lnp.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/272427/original/file-20190503-103053-t25lnp.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=324&fit=crop&dpr=1 600w, https://images.theconversation.com/files/272427/original/file-20190503-103053-t25lnp.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=324&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/272427/original/file-20190503-103053-t25lnp.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=324&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/272427/original/file-20190503-103053-t25lnp.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=408&fit=crop&dpr=1 754w, https://images.theconversation.com/files/272427/original/file-20190503-103053-t25lnp.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=408&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/272427/original/file-20190503-103053-t25lnp.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=408&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><span class="source">Australian National University, Australian Electoral Study 1987–2016</span></span>
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<h2>Labor’s commitments</h2>
<p>Reflecting a renewed enthusiasm for policy aimed at challenging the free rein of the market, the Labor Party has announced a suite of interventionist measures. Some appear aimed squarely at amending the Fair Work Act – for example, legislating to prevent employers using agreement termination to revert to award wages and conditions, and to impose higher penalties for wage theft.</p>
<p>However, the bulk of Labor’s announcements relate to three themes: the problems of ongoing wage stagnation and income inequality, job insecurity and gender equity at work.</p>
<p>Key to the ALP’s wages policies is a commitment to develop a “<a href="https://theconversation.com/shorten-to-announce-labors-living-wage-plan-but-without-an-amount-or-timing-114225">living wage</a>” to keep working people out of poverty. Details of how this will be calculated will likely be left to the Fair Work Commission. </p>
<p>Another <a href="https://www.smh.com.au/federal-election-2019/employers-wary-as-bill-shorten-promises-2-6m-casual-workers-the-right-to-convert-20190423-p51gi1.html">headline announcement by the ALP</a>, easier conversion from casual to permanent work, draws a connection between the prevalence of insecure forms of work and historically low wage growth. </p>
<p>Commitments to ensure labour hire workers receive the same pay as those who are directly employed and an <a href="https://www.alp.org.au/policies/labors-plan-for-secure-jobs/">undertaking</a> to “make sure workers in the gig economy are paid properly and not used to undermine Australian wages, including by changing the legal test for sham contracting” suggest enthusiasm for a recalibration of labour market regulation away from free-market logic.</p>
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Read more:
<a href="https://theconversation.com/the-false-hope-offered-by-talk-of-a-living-wage-114359">The false hope offered by talk of a living wage</a>
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<p>This is reinforced by a broader set of policies focusing on the eradication of <a href="https://theconversation.com/at-last-australia-has-a-modern-slavery-act-heres-what-youll-need-to-know-107885">modern slavery</a>, the inclusion of superannuation in the <a href="https://www.alp.org.au/policies/labors-plan-to-save-workers-super-from-dodgy-bosses/">National Employment Standards</a> and <a href="https://www.alp.org.au/policies/labors-plan-for-pay-transparency-for-large-company-ceos/">reporting requirements</a> for CEO pay in listed companies.</p>
<p><a href="https://www.alp.org.au/policies/labors-plan-to-help-close-the-gender-pay-gap/">Gender equity</a> at work policy provides a stark area of contrast between the two main parties. The ALP has pledged A$400 million towards closing the gender superannuation gap, a 20% <a href="https://www.smh.com.au/federal-election-2019/labor-s-childcare-wages-plan-to-cost-at-least-1-6-billion-a-year-20190501-p51j1n.html">increase in pay for early childhood educators</a> and prioritising gender equity in the Fair Work Act and in the work of the Fair Work Commission.</p>
<p>Linking gender equity to wage stagnation, Labor has announced it will <a href="https://www.theguardian.com/australia-news/2018/jul/01/shorten-promises-to-restore-penalty-rates-and-spend-6bn-on-sydney-rail">reinstate penalty rates</a>, the loss of which has had a disproportionate impact on female-dominated industries such retail services and hospitality.</p>
<h2>Comparing apples and oranges</h2>
<p>The small-target approach of the Coalition to industrial relations during this election campaign is very difficult to compare to the comprehensive suite of policies released by the ALP. This is partly a result of the inherent nature of election campaigns – the incumbent seeks to defend its record and the challenger to present a convincing agenda for change.</p>
<p>What the industrial relations policies of the major parties most starkly reveal is a Coalition that maintains its conviction that fiscal measures such as tax cuts are the best way to “regulate” the labour market, and a Labor Party that’s looking to curb market excesses and redress what it sees as market failures.</p>
<p>This provides a stark choice for voters.</p><img src="https://counter.theconversation.com/content/116256/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Chris F. Wright currently receives funding from the Australian Research Council. In the past he has received funding from the Australian, UK and Dutch governments, the International Labour Organization, various industry bodies and trade union organisations.</span></em></p><p class="fine-print"><em><span>Sarah Kaine does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>At this election there is a stark choice between the two major parties on industrial relations: the “small target” approach of the Coalition and the ALP’s more ambitious and detailed plan.Sarah Kaine, Associate Professor UTS Centre for Business and Social Innovation, University of Technology SydneyChris F. Wright, Senior Lecturer, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1161532019-05-06T20:09:30Z2019-05-06T20:09:30ZBill Shorten’s promise of a living wage is both realistic and necessary. But it’s not enough<p><em>Today we kick off a four part election series on wages, industrial relations, Labor and the union movement. In the first, University of NSW professor Andreas Ortmann examines Labor’s proposal to have the Fair Work Commission award a so-called “living wage” instead of a minimum wage. You can read a comparison of Labor and the Coalition’s industrial relations policies <a href="https://theconversation.com/how-the-major-parties-stack-up-on-industrial-relations-policy-116256">here</a>.</em></p>
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<p>If elected, Labor has promised to ask the Fair Work Commission to <a href="https://www.theguardian.com/australia-news/2019/mar/26/labors-plan-to-change-minimum-wage-to-a-living-wage-revealed">substantially increase</a> the minimum wage, at present pegged at A$18.93 per hour or <a href="https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/minimum-workplace-entitlements/minimum-wages#overview">$719.20 per week</a>.</p>
<p>It says the intervention is justified because under current rules, the commission is required to set a minimum that is a bare safety net, rather than a minimum that someone could use to live properly. This was a change introduced by the Howard government.</p>
<p>Labor’s change will take place “<a href="https://brendanoconnor.com.au/news/latest-news/labor-will-make-sure-the-minimum-wage-is-a-living-wage/">over time</a>,” taking into account the capacity of businesses to pay, and the potential effects on employment, inflation and the broader economy. </p>
<p>It will only apply to the minimum wage, not to <a href="https://theconversation.com/alp-urges-fair-work-commission-to-give-substantial-minimum-wage-increase-113595">other award wages</a>.</p>
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<p>The first step will be for the Fair Work Commission to determine what a living wage should be. In doing so, the Commission will consider submissions from community organisations, business representatives and unions. The Commission will also take into account Australia’s social wage (the amount of tax people pay, and any family tax benefits or other transfers they receive) </p>
<p>The second step will be for the Fair Work Commission to consider the time frame over which the increase should be phased in, taking into account the capacity of businesses to pay, and the potential impact on employment, inflation and the broader economy. It will be the Fair Work Commission’s responsibility to determine a fair and responsible phasing in of a living wage.</p>
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<p>The idea makes sense as part of an election strategy that responds to concerns about <a href="https://www.abc.net.au/news/2018-11-01/fact-check-have-wages-grown-steadily-over-the-past-decade/10447492?fbclid=IwAR1AsMv56F6tnvxR2lH6cT5_i0Nu9QcfNzBvp8jBZbTlSpH5Z2NGFc7FXi8">stagnating real wages growth</a> as well as the impact of the Fair Work Commission’s <a href="https://mckellinstitute.org.au/research/reports/fork-in-the-road/">penalty rates decision</a>, the <a href="https://mckellinstitute.org.au/app/uploads/McKell-Ending-Wage-Theft.pdf">well-documented</a> problem of <a href="https://www.smh.com.au/business/workplace/bubble-bursts-for-tea-chain-giant-chatime-over-underpayment-20190424-p51gt0.html">wage theft</a>, and the related problems of a growing <a href="https://mckellinstitute.org.au/research/articles/explainer-why-is-job-insecurity-so-prevalent-in-australia/">gig economy</a> and a growing<a href="https://www.smh.com.au/education/casualisation-of-university-workforce-is-a-national-disgrace-20180803-p4zvcm.html">casuals labour market segment</a>.</p>
<h2>What’s happening to the land of the fair go?</h2>
<p>There is considerable evidence to back up the perception that Australia is no longer the <a href="https://genius.com/The-kinks-australia-lyrics">land of the fair-go</a> that it once was perceived to be.</p>
<p><strong>Exhibit A:</strong> According to a recent Reserve Bank bulletin, the share of Australian income <a href="https://www.rba.gov.au/publications/bulletin/2019/mar/the-labour-and-capital-shares-of-income-in-australia.html">going to labour</a> has drifted from its height of above 60% in the 1970s down towards 50%. At the same time the share of factor income going to the owners of capital has climbed from 25% towards 40%. (The remainder is classified as “gross mixed income” which has remained fairly stable.)</p>
<p><strong>Exhibit B:</strong> Over the past half-decade, wage growth has done little more than <a href="https://www.abc.net.au/news/2018-11-01/fact-check-have-wages-grown-steadily-over-the-past-decade/10447492">keep up with inflation</a>.</p>
<p><strong>Exbibit C:</strong> Inequality is increasing, a point recently acknowledged by the <a href="https://www.pc.gov.au/research/completed/rising-inequality">Productivity Commission</a>. At the top it seems to be driven more by the seeking of favours than by productivity, a point persuasively argued by <a href="https://www.researchgate.net/publication/272890820_Rising_Inequality_A_Benign_Outgrowth_of_Markets_or_a_Symptom_of_Cancerous_Political_Favours">Gigi Foster and Paul Frijters</a>.</p>
<h2>What happens when you push up minimum wages?</h2>
<p>There is debate in the academic literature about the effects of lifting minimum wages. The basic claim is that, <a href="https://core-econ.org/the-economy/book/text/08.html">as for most things</a>, the higher the price of a worker (the worker’s wage) the less of the thing (the worker) an employer will use. </p>
<p>This may not be a bad thing for workers, a point many people do not seem to grasp. If the percentage wage increase brought about by a higher minimum wage was bigger than the percentage drop in quantity demanded for labour that followed, it might still be worthwhile from the workers’ point of view.</p>
<p>As it happens, there is considerable real-world evidence suggesting that when minimum wages are increased, the quantity demanded for labour doesn’t fall much if at all. I recently reviewed the <a href="https://economics.com.au/2019/04/24/living-minimum-wage-what-we-know/">extensive academic literature</a> on the minimum wage. It got a jolt in the mid-1990s with the massively-cited study by Card and Krueger who found a fairly big jump in the New Jersey minimum wage had <a href="http://davidcard.berkeley.edu/papers/njmin-aer.pdf">no effect whatsoever</a> on employment in the New Jersey fast food industry.</p>
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<span class="caption">Minimum Wages and Employment, David Card; Alan B. Krueger.</span>
<span class="attribution"><a class="source" href="http://davidcard.berkeley.edu/papers/njmin-aer.pdf">The American Economic Review, Vol. 84, No. 4. (September 1994)</a></span>
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<p>While not everyone likes the conclusion, the literature that has followed over the next three decades has overwhelmingly confirmed that employment effects of higher minimum wages are nonexistent or minimal at worst. It also suggests that in some circumstances, higher minimum wages might actually help employers by cutting turnover.</p>
<p>Australia current minimum wage <a href="https://www.fwc.gov.au/awards-agreements/minimum-wages-conditions/annual-wage-reviews/annual-wage-review-2017-18/research#field-content-2-heading">appears to be in the zone</a> where a further increase would cause few problems.</p>
<p>Of course, there’s more to work than supply and demand. Work is where most of us spend much of our lives. It gives us meaning, allows us to feel valued, and gives us the means to make the most of the leisure time it leaves over.</p>
<p>Unless work is fairly paid, crime for example might become attractive.</p>
<h2>Where did the idea of a living wage come from?</h2>
<p>In 1907, three years after the Commonwealth Conciliation and Arbitration Court had been formed, its first president Henry Higgins used an application for tariff protection from the maker of Sunshine harvesters as a test case to determine not merely what was the minimum that their workers should get, but what each needed <a href="https://www.nma.gov.au/defining-moments/resources/harvester-judgement">to support a wife and three children</a> in “frugal comfort”.</p>
<p>His test was “the normal needs of the average employee regarded as a human being living in a civilised community”. After interviewing workers and their wives, he arrived at the sum of 42 shillings per week.</p>
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Read more:
<a href="https://theconversation.com/how-the-old-idea-of-the-living-wage-has-been-embraced-by-the-political-establishment-78635">How the old idea of the living wage has been embraced by the political establishment</a>
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<p>Although it was challenged (and lost) in the High Court, the idea of the legislated minimum being a living wage rather than a bare minimum became the Australian standard, until the WorkChoices Act introduced by Prime Minister John Howard in 2005, which specified instead that it should be a “<a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp0809/09rp13#timeline">safety net</a>”</p>
<p>It seems hard to argue that in light of Exhibits A – C that the current minimum wage of $18.93 is a living wage.</p>
<h2>Could it work?</h2>
<p>The mechanism that Labor has proposed should ensure the move to a higher minimum wage is not too disruptive. Slightly more disruptive might be its promise to restore Sunday and public holiday penalty rates <a href="https://www.smh.com.au/politics/federal/labor-will-fully-restore-weekend-penalty-rates-if-we-win-the-next-election-shorten-20170627-gwzfbm.html">cut by the Fair Work Commission in 2017</a>.</p>
<p>But unless it also address other issues including wage theft, increased underemployment and the related problem of an increasing casualisation of labour, as well as tax concessions for negative gearing and capital gains that <a href="https://mckellinstitute.org.au/app/uploads/McKell-Levelling-the-Playing-Field-NOV-2018-.pdf">benefit high earners at the expense of low earners</a> it won’t have done enough.</p>
<p>Work is changing. Automation is likely to destroy 14% of of our current jobs in the next 15 to 20 years; another one third are set to change radically. Union membership has fallen from more than half of the workforce <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1819/UnionMembership">to about one sixth</a> leaving the future for many workers uncertain and their ability to ask for wage rises handicapped.</p>
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Read more:
<a href="https://theconversation.com/australian-politics-explainer-the-prices-and-incomes-accord-75622">Australian politics explainer: the Prices and Incomes Accord</a>
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<p>In the 1980s, Australia’s Hawke government negotiated an <a href="https://theconversation.com/australian-politics-explainer-the-prices-and-incomes-accord-75622">Accord</a> with the trade union movement in order to ensure predictable but not inflationary wage rises.</p>
<p>Between 1967 and 1977, West Germany adopted a program known
“<a href="https://onlinelibrary.wiley.com/doi/full/10.1111/j.1468-2338.1980.tb00325.x">concerted action</a>” to achieve the same sort of thing.</p>
<p>While neither were lasting successes, the idea of building trust between parties that have conflicting interests has potential. In some ways it is similar to the process that the Fair Work Commission currently uses to determine annual adjustments of minimum wages and awards. A lot can be achieved when people think they are being listened to and think the process is fair. </p>
<p>To work, it needs trade unions respected and taken into the tent as representatives of workers. Bill Shorten is in a good position to do it.</p>
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Read more:
<a href="https://theconversation.com/the-false-hope-offered-by-talk-of-a-living-wage-114359">The false hope offered by talk of a living wage</a>
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<img src="https://counter.theconversation.com/content/116153/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andreas Ortmann receives funding from the Australian Research Council (Discovery and Linkage grants) and the UNSW Business School.</span></em></p>It ought to be possible to replace Australia’s minimum wage with a higher “living wage” without putting people our of work, but more will be needed.Andreas Ortmann, Professor, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.