In Australia, Workers Are Facing Another Decade of Wage Suppression

A jobs and skills summit brought together union, business, and government leaders to address stagnant wages in Australia this week. While some seemingly progressive proposals got much attention, the outcome is set to further undermine pay and conditions.

An employee stocks meat products at a Woolworths supermarket in Melbourne, Australia, on January 27, 2010. (Luis Enrique Ascui / Bloomberg via Getty Images)

This week the Australian government hosted its “jobs and skills summit.” The paper agenda as well as the guest list — a combination of government representatives, business, unions, and “community” organizations — had been public knowledge for weeks, but until now, the summit’s purpose remained unclear.

A chimerical series of claims were made throughout late August by the ruling Labor Party, the Australian Council of Trade Unions (ACTU), and the Business Council of Australia (BCA). The government had initially explained the event to be in the service of boosting wage growth and vowed to act on this issue regardless of developments at the summit. The ACTU condemned the industrial relations system as pro-business and demanded a rebalancing in workers’ favor. For their part, business groups warned that the summit risked dragging Australia “back to the ’70s.”

But two days before the event the tone mysteriously shifted. The ACTU and BCA announced a “unity ticket.” Both ACTU secretary Sally McManus and BCA chief executive Jennifer Westacott declared that all parties were on the same page. The industrial relations system, they argued, could and should be “simplified.”

Workplace relations minister Tony Burke welcomed the apparent détente. On day one of the summit, Burke announced that he would move immediately to amend the Fair Work Act, supposedly in workers’ interests. But the legislative changes that were announced at the summit by no means herald a positive outcome for workers.

In fact, the event can be read as the latest episode in a decades-long collaboration between the Labor Party, certain affiliated unions, and the courts to suppress wages.

Trojan Horses Chug Beers, Don’t They?

More than any other structural reform, it was the Labor Party’s 1983 Prices and Incomes Accord that has set the scene for forty years of rising profits and falling wages. The accord forbade confrontational worker struggle for wage rises and demanded tripartite negotiation between business, unions, and government. Bob Hawke, the Labor Party leader who spearheaded the accord, projected a “knockabout bloke” persona, chugging beers to great acclaim. In return for workers’ easygoing submission, Hawke promised, cost-of-living expenses would be capped.

Certain sections of the union movement — including the nurses’ union in Victoria — initially refused to give up on the concept of industrial struggle. Unscrupulous string-pullers in the movement helped implement Hawke’s agenda by politically marginalizing the leaders of these refusenik branches. Many rebels were forced out of the movement entirely.

What followed from this strategy is well known. Workers’ share of national income fell from 62 percent before the accord to 50 percent in 2021. Profits have soared to a record share of GDP. But the promised cap on cost-of-living expenses never materialized. Having dramatically increased its profits, business has instead chosen to increase prices, driving up inflation.

But the accord can’t be called a failure — this result is what it was really intended to do.

It might be argued that profits have soared at the expense of wages in all Organization for Economic Cooperation and Development (OECD) countries over this same time frame. But since 2013 this trend has been more marked in Australia. In fact, unlike the OECD countries as a whole, both nominal and real wage growth has declined for Australian workers in this period. The past ten years have seen the feeblest wage in the country growth since 1945. But why?

God’s Gift to Woolworths

A huge part of the blame rests with a behemoth of Australian politics: the Shop, Distributive and Allied Employees’ Association (the SDA). It’s an ultraconservative yellow union that wields considerable power thanks to several unusual arrangements.

The first is its closed shop arrangement with some of the biggest employers in the country. For several decades, Woolworths, Coles, McDonald’s, and other large retail and fast-food companies have allowed the SDA to recruit as many new members from their sites as they can. More than just a membership-dues bonanza for the SDA, this deal enables its second dubious arrangement.

Since the SDA is, on paper, at least, the biggest union in Australia, it is granted considerable voting rights at Australian Labor Party conferences. This has allowed the SDA to unduly influence national policy over the years — most memorably by delaying the introduction of same-sex marriage. Through this influence on national policy, the SDA helped facilitate the rise to prominence of industry superannuation funds. It now holds 50 percent representation on one of the countries’ largest funds, jointly managing AUD $66 billion with big business representatives.

Thanks to its closed-shop stranglehold on hundreds of thousands of workers, its powerful factional role, and its superfund board seats, the SDA has perhaps greater power over the flow of capital and the suppression of wages than any other single organization in the country. And it uses it.

In the 2000s it struck a series of industrial agreements with big employers that covered hundreds of thousands of workers. Thanks to the friendly relationship between the negotiating parties, these arrangements sailed past the industrial watchdog with little fanfare. They would later become infamous. These dodgy deals reduced wages and conditions below the minimum legal standard, essentially stealing billions of dollars from workers and gifting it to big business. Investigations proved signatories knew that the deals undercut workers’ conditions.

This mass reduction in wages flowed on to the rest of the economy. Small and medium businesses engaged in widespread wage theft, in part to compete with big business. By 2013 the minimum standard of wages and conditions had been so thoroughly undermined it was deemed unrealistic. The then Labor workplace relations minister Bill Shorten legally mandated that every four years the minimum standard must be “reviewed” — code for “reduced.”

The scale of this industrial sabotage of workers’ interests began to be exposed in 2016, but by then the Fair Work Commission had already agreed to cut wages for award workers across the country. Forget about wage growth — cuts aimed at reducing the wage floor were now the legally mandated norm.

Bosses Put the BOOT In

Big business strategies to suppress wages have proven extremely successful over the past decade. But several factors now have employers irritated. Extremely low unemployment — in part as a result of an almost-complete halt on skilled migration — coupled with the less rigid working conditions that have been a product of lockdowns have driven up worker expectations. Bosses anecdotally report less compliant, more demanding employees and desperately want to temper such expectations and discipline the workforce.

Another spanner in the works has been the emergence of the Retail and Fast Food Workers Union (RAFFWU). This militant alternative emerged in 2016 to combat the SDA and has successfully campaigned to scuttle many of the shady deals the latter approved. This has meant the ongoing transfer of billions of dollars back to workers — billions that companies like Coles and Woolworths thought they had in the bag.

These irritations lie behind the strong focus of all parties at the summit on “the BOOT” (the Better Off Overall Test). The BOOT is an existing rule that says that no new industrial agreement can leave any worker worse off than the Award. It’s the key legal reason the SDA deals were scrapped — they left countless workers worse off. The vengeful new refrain from business is that the BOOT in its current form must be scrapped. As Westacott from the BCA explained just days before the summit

The principles that Sally [McManus] and I negotiated a couple of years ago are basically the ones that we should take forward. Don’t get rid of the better-off-overall test, make it better, make it about better-off-overall, not better off in every single circumstance. Get rid of this idea of hypothetical workers.

Workplace relations minister Burke — whose political career started in the SDA — agreed with Westacott and posed the question in terms of workplace democracy. He argued that

[Sometimes] there are tiny clauses, tiny specific rules, agreements that have had, you know, more than 90 percent support from members, have been overturned on a technicality. . . .

Both these claims are disingenuous. These soon-to-be-legislated changes mean that unions would no longer be allowed to include potential future rostering situations in agreement negotiations.

Workers’ likely disadvantage couldn’t be considered until it was actual disadvantage, by which time the deal would already be law. In practice this would mean the BOOT becomes completely redundant. Employers could simply propose wage and penalty structures that don’t adversely affect workers in existing rosters, then alter rosters to favor profits and reduce wage bills once the agreements were signed. It’s just a new employer strategy to further reduce minimum wages and conditions.

Let’s be clear: Westacott’s “hypothetical workers” are the hundreds of thousands of very real workers at Woolworths, Coles, and elsewhere who had billions cut from their wages. Burke’s “technicalities” are the agreement clauses that allowed employers to cut them.

A potentially disturbing addition to the looming redundancy of the BOOT is Burke’s promise to legislate multiemployer bargaining. This change would mean that wages could be negotiated by sector rather than between a union and an employer. This could theoretically be progressive: the Metal Trades Award was a mid-twentieth-century example of union metalworkers banding together to negotiate above-award rates in in the industry. It had a positive knock-on effect to other sectors in terms of boosting workers’ wages.

Given the context of the big employers using wage suppression in retail to reduce wages across the board, what we are far more likely to see is a Metal Trades Award in reverse. Employers like Coles and Woolworths could band together with medium enterprises like the bookstore chain Readings to negotiate agreements that undermine award rates, with a subsequent downward push on retail wages across the board.

Prime Minister Anthony Albanese endorsed these changes as being fundamentally about productivity and profitability, a clear signal that, as one commentator recently put it, Labor has positioned itself as “the manager of intersecting parts of capital, and the guarantor of stable circumstances for accumulation and profit.”

A Question of Power

Post-COVID, there is a higher expectation among workers that our lives shouldn’t be unilaterally decided on by our employers and that wages must at bare minimum keep up with the cost of living. But expectations alone cannot compete with the decades-long schemes of big business and their representatives in Parliament. If anemic wage growth is to be turned around, it can only be with a renewed wave of organization and industrial struggle.

But with consultation on these legislative changes due to begin next week, the situation is looking grim for workers. Between the ACTU’s renewed friendship with the BCA and an SDA man in charge of the Workplace Relations Ministry, it looks more likely than ever that big business will recoup its billions from the scuttled shady deals, discipline worker expectations, and lower the wage floor yet again. The scene is set for another decade of wage suppression.