“Wages in Australia are moving reasonably at between 3.2 and 3.5%. We are not getting overrun by wage claims in Australia. Secondly, the assumption that everyone is on strike is not correct. The average industrial period of lost time, to use a pretty basic measure, is one-third of what it was in the Labor five and a half years [in government] compared to the Howard ten and a half years. Labour productivity has been up for the last seven quarters.” - Minister for Employment and Workplace Relations Bill Shorten, ABC’s Q&A, 26 August. (Watch the segment on industrial relations here.)
On this week’s Q&A, one questioner suggested that unions were pushing wage claims too far and that industrial action was sending companies overseas. Bill Shorten, Minister for Employment and Workplace Relations - and a former union official - disputed this.
But were his claims on wages, industrial action and productivity correct?
Concern about wages growth arises from its cost to employers. The Australian Bureau of Statistics’ (ABS) wage cost index grew by 3% in trend terms between June quarter 2012 and June quarter 2013, the most recent data available. This is an index that measures the change in wages paid to the same workers in the same jobs from one period to the next. It actually suggests slightly lower wage cost growth than the minister stated.
Average weekly ordinary-time earnings for full-time adult employees grew by 5.1% in trend terms between May 2012 and May 2013. However, this is not considered a reliable measure of the cost of wages growth as it is heavily influenced by compositional change (a greater proportion of people taking higher-paid jobs, for example in mining, raises the average but has no implications for costs or inflation). Hence the ABS now always releases the wage price index the day before this measure, to give the index greater prominence.
Another indicator of wage pressures is the rate of growth of wage outcomes under federal enterprise agreements collated by the federal Department of Education, Employment and Workplace Relations. Data released on Tuesday showed that agreements approved in the June quarter 2013 contained annualised wage increases averaging 3.4%, down from 3.8% in the previous quarter. Although slightly higher than the Minister’s states, it also suggests an easing of pressure from wage claims.
On Shorten’s claim that the “average period of lost time” is less under Labor, this probably refers to the ABS measure “working days lost per thousand employees”. This is an indicator of the average time lost per employee through industrial disputes and is measured on a quarterly basis by the ABS.
Through the Howard years (from the June quarter 1996 through December quarter 2007), an average of 13.5 working days were lost per thousand employees per quarter. Over Labor’s years in government (from March quarter 2008 through March quarter 2013), the average figure was 4.9 working days lost. The latter figure is 36% of the former figure, or close to Shorten’s claim of one-third.
Working days lost per thousand employees is a measure frequently used. It could be argued that a more appropriate comparison would be between the period of the Coalition’s Workplace Relations Act (until major parts of it were repealed by Labor), and Labor’s Fair Work Act, since both governments had to draft, enact and implement their own legislation. This comparison is less favourable to Labor, but still shows disputation levels under the Fair Work Act to be 43% below the Workplace Relations Act.
To look at the data another way: with average strike duration of around five days per employee, on any average day, less than one worker in a thousand has been on strike.
The national accounts include estimates of labour productivity both as gross domestic product per hour worked and as gross value added per hour worked in the market sector. Both give similar patterns over the last two years, but the latter is restricted to sectors where more reliable estimates of productivity are available.
In seasonally adjusted terms (the “headline” statistic that often features in press reports), this measure has grown in each quarter since June quarter 2011, a total of eight quarters.
In trend terms, which are generally more reliable, this measure of labour productivity has grown each quarter since March quarter 2011, that is, for nine quarters.
Over the last two years, labour productivity growth measured this way has averaged 2.4% per year. (This compares with an average of 2.1% through the years 1997-2007, and 0.7% per year over the last two years of Coalition government).
The three claims of Bill Shorten regarding wages, industrial conflict and labour productivity are broadly correct. Any errors were minor and were in his favour at least as often as against it.
Wage costs are growing at slightly less than he claimed, while wage pressures shown in current agreements are slightly higher, but receding.
His comparison of industrial disputes under the Coalition and Labor years was essentially correct. An argument could be made about the choice of time period, but a different period would still show a major fall in disputation.
His claims on productivity growth slightly understated the period of time through which Australia has been experiencing successive growth quarters.