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Why must it always be the workers who pay?

The foundation of the Australian Federal Minimum Wage was the 1907 Harvester decision where Justice Higgins, President of the Commonwealth Court of Conciliation and Arbitration, quantified for the first time what was a ‘fair and reasonable’ wage for unskilled labour.

He approached the question by considering a wage which was appropriate to “the normal needs of the average employee regarded as a human being living in a civilised community”. He further articulated this as being a wage sufficient for “himself and his family” and as “a wage sufficient to insure the workman food, shelter, clothing, frugal comfort, provision for evil days, &c”.

In making his judgement Higgins drew upon a range of evidence which was presented in hearings – including by “working men’s wives and others” – on what might be the “necessary average weekly expenditure for a labourer’s home of about five persons”.

His view was that a business which could not afford to pay its workers a decent wage was not a viable proposition in the first place.

Over the years, this definition of the purpose of the minimum wage has been eroded. Effectively the changes have seen the minimum wage held constant in real terms with the role of support of the family being taken up by increases in government transfers for families with children and the decline of the single breadwinner family. In essence this has transformed the minimum wage to a wage for a single person with the state taking on the support for children.

Incidentally, it was not until 1975 that the minimum wage was applied to female workers, Gough’s legacy not only allowing Australians to be Australian, but women to be recognised as people.

Between September 1983 and July 1995 under a series of seven ‘Prices and Incomes Accords’ between the ACTU and the federal Labor Government there were a series of negotiated trade-offs of wage increases in favour of social wage benefits. These included: personal income tax cuts; child care subsidies; increased family payments; health care through Medicare; and the development of employer funded superannuation.

While most of these policies involved government expenditure (or reduced revenue as a result of tax cuts) as a trade-off for wage restraint, this was not the case with superannuation. The first stage of this was implemented in the 1986 National Wage Case which, in lieu of granting a wage increase for productivity gains, agreed a proposal for an employer contribution to superannuation of an amount equal to 3 per cent of wages for those workers employed under awards.

With the government talking about reform in areas such as industrial relations, the gender gap in superannuation, and raising the retirement age to 70, they must consider both the history and the interplay of policy on the goals they are trying to achieve.

Many of our workplace entitlements came as a trade- off for wage restraint and social policy. So when the Productivity Commission talks about winding back the minimum wage and penalty rates, and the Social Services Minister wants to reduce family payments, and the Health Minister tries to introduce co-payments, the worker is bearing the brunt of cuts they have already paid for.

Their concern about women having less superannuation is belied by their actions of rolling back the low income co-contribution and freezing the superannuation guarantee. The Coalition have always fought against employer contributions to superannuation but are very happy to give wealthy people, who were never going to qualify for the aged pension, the opportunity to minimise their tax.

As they talk about crises in both aged and child care, in suggesting we work till 70, they ignore the role that many people in their 60s play as carers. They facilitate their children re-entering the workforce and their parents remaining in their own homes for longer. They may even be caring for their partners as well. Carers’ allowance is a wise economic investment.

Prior to the Harvester decision back in 1907, it was parliament which decided that there should be a tariff exemption to employers who paid a “fair and reasonable” wage.

Perhaps, instead of stripping workers’ entitlements and cutting company tax for those who already don’t pay their fair share, we should revisit that idea of rewarding employers who do the right thing – those who recognise their obligations in the social contract, those who understand the urgency of sustainable production and waste management, those who pay their workers a wage appropriate to “the normal needs of the average employee regarded as a human being living in a civilised community”.

 

53 comments

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  1. Terry2

    Excellent article, Kaye : it does us no harm to be reminded of the evolution of our basic wage system and the common sense and humanity of people like Justice Higgins way back in 1907.

    Thanks

  2. Andreas

    Good article, Kaye.
    The sad truth is that in this dog-eats-dog industrial environment only those unions survive that hold together. Not many of those left. Future doesn’t look bright with overall union membership at, what, 14%. And the “new union” reps crowding the ALP front benches…

  3. Kirsten Tona

    Hit the nail right on the head, as always, Kaye Lee.
    The two-pronged attack on workers comes from people with the most dangerously unearned sense of entitlement in our history, and who are so psychiatrically infirm that they project this onto others and abuse them for it.
    Once more we should consider:
    a) a basic living income for all citizens along the lines of the model the Swiss put up for consideration, and
    b) paying that and only that to our elected representatives.
    For now, politicians ought to be paid the minimum wage. And given all relevant government concessions, but no more.
    People who have absolutely no understanding of that kind of life should never be in charge of making crucial decisions for those who live it.
    And if anyone raises the just plain stupid old saw:
    “If you pay peanuts you get monkeys,” I would reply:
    “If you pay ransoms, you get bandits.”
    As so many of our current representatives prove.

  4. Florence nee Fedup

    What I would like to understand is when the “common wealth” created by labour and capital with support of a democratic government came to be the sole property of wealthy capital.

    What happen to the pie being share fairly and equally.

    We need to move from them and ours to us.

  5. mars08

    Fortunately we still have the ALP taking a loud and uncompromising stand against the unfair, greedy bosses. Right?

  6. Bronte ALLAN

    This country must have the largest lot of overpaid monkeys in the world! Your article says it all Kaye, as usual! We MUST never go down the path of the workers in the USA, who have very poor “minimum” wages, & yet if this inept mob of lying, tea party, right wing, flat earth conservatives have their way, this is where our workers will “land”! So called “minimum” wages are really a misnomer for paying all the (low) paid workers, as little as the majority of the obscenely wealthy–at “our” expense mind you!–can legally get away with. I hope we are not “forced” into having to pay our lowest paid workers “tips” like it is in America? Their “system” is geared so that ALL people on their minimum wages HAVE to rely on tips just to get a decent living wage! BASTARDS! Just watch as our wealthy PM & his wealthy industrialist/mining/media mates tries to force the so-called average/minimum wages downwards!

  7. brickbob

    Bloody good article,and this current Fed Govt is doing what all Conservative Govts do,reward the wealthy at the expense of the not so wealthy,we really need a Corbyn or Trudeau or a Sanders in this country,but i would’nt hold my breath on that prospect.”

  8. Wally

    This article is a cracker Kaye.

    “in suggesting we work till 70”

    Expecting a tradesman or labourer who has performed heavy manual work for 40-50 years to work until they are 70 is ludicrous if it is at all possible for most. We no longer have pathways where people advance from the shop floor into the production office and then into a senior management role. Nowadays university graduates leave school and after creating havoc in the production office and blaming the workers for the issues get rewarded with a more senior position. One of the biggest issues affecting productivity in Australia is the mistakes that should never occur that cost a lot of money to rectify. If we capitalised on the expertise developed on the shop floor the way we used to the working life of employees could be extended and our productivity could be improved. The biggest problem is people (usually straight out of uni) deciding to implement changes without investigating why we do something in a particular way until it all turns to shit.

    This article is another example of people making changes without understanding the fundamentals of what they are playing with and it is causing havoc with millions of workers and their families. The flow on affect is also causing problems with our economy in many ways, directly by reducing disposable income and indirectly because people don’t want to work hard for a low income. Who can blame young people for not wanting a job without a future or the possibility of advancement when they can go to university or get the dole. We hear executive talk about incentive and reward for effort but they never consider the lowest paid workers while they are feathering their own nest.

  9. Matters Not

    It’s the USA direction we travel. On the downside, we have Dunkin Donuts where the current ‘hourly rate is somewhere between $7 and $9, depending on whether one is a ‘baker’ or a ‘manager’. The CEO in 2014 earned over $10.2 million

    Dunkin Donuts CEO Nigel Travis – who previously held senior positions at Papa John’s and Burger King, other low-wage employers – appeared on CNN and decried the $15 minimum wage as “absolutely outrageous.” He went on to claim that the move will prevent his company from hiring more people and would “affect small business and franchises.”

    http://www.alternet.org/dunkin-donuts-ceo-who-earns-10-million-claims-be-outraged-15-minimum-wage

    It’s always the same nonsense argument.

    On the other hand we have the (failed) departing CEO of Channel 10 who held been in the position for approximately two years.

    Ten’s end of financial year report, released this morning, reveals another terrific reason for McLennan heading to greener pastures – a whopping $8.04 million payout.

    Ten’s end of year financials said McLennan – who left his post with immediate effect – received “termination benefits” including 12 months’ salary, a $1.9 million payment lieu of notice and a $250,000 negotiated termination payment. He also received $3.82 million worth of shares and options under the network’s incentive plan.

    https://www.bandt.com.au/media/tens-departing-ceo-hamish-mclennan-left-building-with-swags-of-cash

    The message is clear. Some are deserving. Others are not.

    I should add that Channel 10 lost $264 million in the latest financial year. Perhaps a Royal Commission into Executive remuneration and termination?

  10. Matters Not

    Dear oh dear:

    who held been in the position

    Try ‘who held the position’.

  11. lawrencewinder

    Good article….. why is living under this ruling /IPA/rabble like trying to breathe underwater?

  12. Denis Bright in Brisbane

    A wonderful article on behalf of wage-earners and a commitment to a return to the social wage in a social market economy.

    Keep up the good work, Kaye.

    A lot can be gleaned by a return to the federation era in Australian history prior to 1914.

    The LNP offers a very false interpretation of Australian history with an emphasis on overseas military commitments.

    One great feminist colleague with whom I worked always challenged students on this issue and asked them to balance sagas of military heroism with critical analysis of the commitments of our leaders to the peace and social justice.

    After all she told the students, Australia is not permanently at war.

    Many of our conservative leaders who glorify militarism had no association with the armed forces: Hughes, Stanley Melbourne Bruce, Lyons, Menzies, Fraser, Howard,Abbott and Malcolm Turnbull to name a few!

    Collectively, they had little respect for industrial awards, the social wage or the humanizing of capitalism within the social market.

  13. Geoff Andrews

    Kaye,
    I have to confess to a blatant act of piracy: I’ve copied that fantastic ad at the head of your blog/post/article (what’s the correct term, FGS?).
    You have to assuage my guilt and tell me it’s something from the Gruen Transfer; or hacked from Erica Bets’s computer’s “Random Future Ideas” file.
    Better still, tell me it’s a genuine ad leaked from the Liberal’s advertising agency.
    It not only hits the spot – it removes it!

  14. Kaye Lee

    Geoff,

    The image came from googling ‘minimum wage meme’ images. Unfortunately I can’t attribute the originator because now google links to the AIMN. I believe it came from the US originally who point to Australia to refute the argument that a minimum wage costs jobs.

  15. Kyran

    In a moment of delusion, I wondered how this conversation would look if we were discussing the maximum wage. Even should it be as low as $2mil, I suspect it would be decried as an assault on free enterprise, reward, incentive. I suspect it would even invoke some to say they couldn’t possibly live on that amount. Whilst it would likely only effect a small portion of the populace, I suspect the ‘average income earner’, at $77,194 pa, would be vocal in their disapproval.
    As long as the discussion is directed at the ‘minimum’, there is no prospect of addressing the issue of inequality. In my opinion, that’s the aspect that needs to be changed.
    ‘Pink’ had a song titled ‘Dear Mr President’. As best as I can work out, it was written a century after the ‘Harvester decision’ and underscores how much we now aspire to turn the clocks back. As others have noted, capital good. Labour bad. Thank you, Ms Lee. Take care

  16. Florence nee Fedup

    Not labour good. capital bad.

    It is labour plus capital, along with government support creates wealth in our democracy.

    All are entitled to fair and just share.

    Yes, the government too.

    Why capital believes the wealth is theirs, created by them is beyond me.

    They are a part of society, along with those on the bottom. No better, no worse.

    What we should be talking about, is the best way to share that cake.

  17. mars08

    It’s depressing that our fundie tories get so many of their opinions direct. .. and unfiltered… from their rabid US cousins.

  18. diannaart

    @lawrencewinder

    …why is living under this ruling /IPA/rabble like trying to breathe underwater?

    If we complain our overlords will tell us that water is part oxygen and to stop complaining.

  19. mars08

    Not a rhetorical question… not sarcasm… Is this a site for freaks, outsiders or just the horribly naive?

    The reason I ask is that the sentiments I see here never appear in the msm and are never uttered by prominent politicians. It’s as if people on this forum come from a parallel universe. Our opinions apparently have no place in this reality.

    Why are we so out of step?

  20. RosemaryJ36

    mars08 – It is the wealthy who direct the MSM so it is only their views which are deemed acceptable. But then you knew that and your comment was made tongue in cheek!
    I am sometimes reminded of the background history of the French revolution and wonder what is our symbolic Bastille?

  21. diannaart

    symbolic Bastille?

    Murdoch’s head office?

  22. mars08

    @RosemaryJ36 … Sadly not entirely tongue in cheek. I really do wonder about the lack of vocal outrage from the general public, the silence from our high profile politicians, the distraction of our youth and the hesitation from our entertainers. The apathy is truly disturbing. Frankly it often feels like we here are merely freaks and fringe dwellers.

  23. Backyard Bob

    Of course people here are fringe dwellers. What the hell did you think you were? And yes, it’s disturbing, if not tragic, for that to be so. Modern politics is so vexed, so salacious and so morally putrid it’s understandable that so many people can’t find it within themselves to engage it, no matter how important it may actually be in their lives.

  24. Kyran

    There is a walk on this weekend. Welcome to Australia. Whether the MSM chose to report it is irrelevant. Sites such as this allow for interested people to comment and discuss. As others have noted, these demonstrations should be more frequent, given the abrogation of values this country once held dear. As an aside, mars08, if you see a space ship with the keys in the ignition, can you let me know. I forgot where I parked it. On the upside, I can give you a lift. Take care.

  25. mars08

    @paul walter…. and yet most country folk keep voting for the Nationals…

  26. Just saying is all

    Hi Denis Bright in Brisbane
    Re Stanley Bruce and no military service. Bruce served as a captain in the British Army in World War I; was severely wounded at Gallipoli; awarded the Military Cross and the Croix de Guerre avec Palme.

    Not that I am supporter of Bruce or any LNP type but lets gets the facts correct.

  27. CommonA

    mars08 – Someone pointed out a while ago that any sane person would look at the world and figure out how to best live in it, while those not quite so sane would try to change it – hence the world was ruled by the insane (or something like that)…. to apply it to your question, Capitalism is inherently inhuman, all it cares about is value… all a profit-loss statement cares about is figures, not people…. If a business makes a loss, soon no one is employed, and you have to either start a business yourself or wait for something else to fill the vacuum. If a business is making too much of a profit on the backs of the employees, then there is an opportunity for competition (same wages, lower profit margin => cheaper for consumer => less business for greedy person). The sane person realises this and stops trying to make capitalism have a heart, it just accepts it as a cold monster and looks elsewhere for human warmth.

    I don’t think you will ever fix the too much profit problem by increasing minimum wage… you just stifle competition, flexibility and adaptability…. To stop fat cats exploiting the workers, you really need them to have a change of heart…. Or for the exploited to have the opportunity to start their own competing business… One is part of capitalism, the other one is out of our hands.

  28. Kaye Lee

    CommonA,

    That presupposes that those who own the capital are more important or more powerful than those who provide the labour they depend on. Whilst that may be the current situation, it can change in a blink if workers unite so, call me insane, but I don’t think the capitalists should rest too easy. Imagine the effect on share prices of a prolonged strike. It is easier for the collective to subsist for a while than it is for the corporate sphere. One can only prod a sleeping tiger so far. Businesses of the future could well look very different to today’s model.

  29. CommonA

    Kaye, yes anyone running a business is at the mercy of the people they employ. The capitalists are the ones who are willing to take that risk. Perhaps the hive-mind is the business model of the future?

    I’m just saying business, and profit models can all look very different without ditching capitalism, not all bosses are “bad”, not all workers are “good”, people are people, and so far collaborating around money as the means for trade has been the best and fairest model we humans have yet devised…. the governing factors seem to be the levels of “goodness” / “decadence” / “corruption” / “philanthropy” of the people at the time, all of which has nothing to do with money, but with the heart…. and you cannot change the heart with rules from the outside… but the list of the richest people / capitalists can and does change in a heart-beat…

  30. Matters Not

    Someone pointed out a while ago that any sane person would look at the world and figure out how to best live in it

    That person or (persons) was the one who ‘created’ it, or at least benefits most from that advice. The fact that you attempt to pass on that ‘advice’ is a worry. I am reminded of Paulo Freire:

    Education either functions as an instrument which is used to facilitate integration of the younger generation into the logic of the present system and bring about conformity or it becomes the practice of freedom, the means by which men and women deal critically and creatively with reality and discover how to participate in the transformation of their world” (Freire, 2000, p.34).

    Me? I would sooner be an ‘architect’ rather than a ‘worker bee’? The choice is always yours.

    Or do you simply think of ‘Mother England’?

  31. Wally

    Kaye Lee

    “it can change in a blink if workers unite”

    The LNP have done everything they can to attack unions to the point that the majority of people think unions are the enemy, for the average worker the union is their best friend. You only have to compare the wages of trades with strong unions (electricians and plumbers) to trades with less leverage (mechanics) because they don’t have large numbers working on construction sites. It astounds me the number of people who cannot relate that their wages and conditions are (to some extent) the result of unions in general even if they are not members.

    We need a new age workers association with a new name, a broader philosophy and wider industry scope to stop the erosion of our wages and conditions. It must be minimal cost to be a member, have a dynamic leader who can relate to both sides of a debate and not be swayed by the challenge. We have a regular contributor who would fit the bill perfectly, Kaye Lee.

  32. Matters Not

    Wally, union membership in the private sector declined 11% in 12 months according to Dave Oliver. (Not sure of the current overall figure but I understand it’s now at about 15% of the ‘private’ workforce’.)

    In certain ‘occupations’ and ‘industries’ it ‘approaches’ (I use that word advisedly) 100%. The AMA, Teacher Unions (in both the public and private sectors), Professional Engineers and any number of ‘bosses’ unions or associations are still thriving.

    It would appear that ‘those in the know’ understand that ‘collective action’ is essential to achieving and exercising power. Members and representatives of all political parties know it, even those who decry ‘collective action’.

    It’s a strange, strange world we live in.

  33. CommonA

    Matters Not… I had another attempt to attribute the quote I attempted to relate (rather poorly)… it was from George Bernard Shaw:
    http://www.goodreads.com/quotes/536961-the-reasonable-man-adapts-himself-to-the-world-the-unreasonable
    Does that still fit the narrative?

    As for liberation… from what I’ve seen even those who are “educated” can still see themselves trapped by the system….

    And why did you match “worker bee” with “architect”, rather than the more natural “queen bee”?

  34. Matters Not

    I think my somewhat lengthy response to CommonA is caught in the spamminator. On any number of occasions.

    Can anyone help?

    Or should I simply respond in ‘parts’?

  35. Matters Not

    Tried responding ‘parts’ but that didn’t work as well.

    Why am I unloved?

  36. Kaye Lee

    Matters Not,

    I am a technophobe with limited capabilities at driving this beast but it appears to me that someone just did a large spam cleanout. Sorry if we lost your pearls of wisdom. Please try again.

  37. Matters Not

    Pearls before …

    Not me Kaye.

    More like ‘wasting my sweetness on the desert air’ as Thomas Gray would say.

    But I will try again. And again. And …

    But there’s no need to go on and on and on. For fear I would be doing an Abbott.

  38. Matters Not

    Tried again but failed again. And so it goes.

  39. mars08

    The benefits of a unionised workplace.

    It strikes me as a glorious coincidence that the collapse of manufacturing in this country (and the loosening of 457 visa conditions) serves to decimate what is probably the last remaining union strongholds. And that newer jobs have little or no union representation.

    Like I said, just a coincidence…

  40. Matters Not

    serves to decimate

    ‘Decimate’? Really? Only a loss of 10%? I am sure there are many unions that would be relieved if their losses were limited to 10%.

    Or perhaps the word you’re looking for is ‘devastate’?

    Not that I have any control over what ‘meaning’ you give to words. I only have control over the ‘meanings’ I give. And I distinguish between ‘decimate’ and ‘devastate’ based on ‘etymology’.

    What’s your story? Care to clarify?

    Not that it matters. Except of course, if you’re intention is to ‘communicate’.

  41. Matters Not

    ‘you’re’ should be ‘your’ intention, of course.

  42. diannaart

    The IPA could be considered a union (on the dark side of the force).

  43. mars08

    @Matters Not… As I was typing that word, I remembered that somebody had once made a big fuss over it on this site. It was late, I was very tired so I didn’t change it. I chose to push the boundaries, hoping I’d survive unscathed.

    ‘Grammatik macht frei’

  44. diannaart

    Way back when ‘to decimate’ meant taking 10 percent – populations (and valuables) were much smaller – a village of 30 persons could indeed be decimated.

    Work made me free to waffle on internet.

  45. Wally

    diannaart

    You make a good point, there are many industry groups that could be considered to be unions, even the Chamber of Commerce.

    Some of the employer group claims you read in the press are totally absurd, we must be due for the annual Melbourne Cup spiel. They always claim that people taking a sickie on the Monday before the cup to make it a 4 day weekend costs business a huge amount when in fact people are using entitlements that they are entitled to. These entitlement wether they are sickies, rostered days off or accumulated time for working back do not add any cost they have already been costed against employees.

  46. diannaart

    Indeed, Wally

    Heard on 774 local today, a poll of 150 businesses have claimed Grand Final Day holiday to be too expensive to pay staff, been trying to final link – no luck so far.

    Despite other claims that this holiday was a success:

    http://www.abc.net.au/news/2015-10-02/melbourne-cbd-bustling-on-first-grand-final-eve-public-holiday/6823808

    This ideology, that paying a pittance to workers increases jobs, is a nonsense if people cannot afford to get to work let alone live a frugal life. Besides where does the penny stop? Paying zilch? Maybe employers could start charging people to work for them – cover the cost of lighting, water etc…

    Of course such organisations as the IPA, Chamber of Commerce et al, don’t call themselves ‘unions’ – dirty word. Perhaps Trade Unions should start calling themselves think-tanks (not a favourite term) or how about centres of excellence?

  47. mars08

    Just wondering out loud. What would generate more activity in our economy …? One million wage earners with $800 extra per year, or 100 millionaires with $8,000,000 exrta? Frankly I have no opinion…

  48. Wally

    diannaart

    Like “centres of excellence” and that is probably an understatement when considering the intellect (or lack) of Tony Abbott.

    I read a HS article along the lines of your 774 local report and it claimed something to the affect that it cost each employer $1400- to give workers the public holiday but there was no reference to the source of the claim or how the figures were calculated. Like you I could not find a link when I went back later in the day. My first concern with the figures is if any so called loss of sales was included, I needed some building materials on the Friday and found my regular supplier was closed on the Saturday as well. I went to my supplier on Monday and purchased what I needed, in my case and I suspect the majority of cases the date of purchase is all that changed and my mates at the timber yard had a long weekend away and I am sure they spent money they normally wouldn’t have.

    The only sales I could consider were lost would be spontaneous purchases by interstate footy supporters and I am certain that would be far outweighed by the money spent by people enjoying a trip away for the long weekend. I believe the coastal resorts along the Great Ocean Road had a huge weekend and there was a constant stream of traffic heading west on the Princess Highway toward Warrnambool.

  49. Wally

    mars08

    There is a belief that if you give money to the average person they will spend it but if you give money to a wealthy person they will use it to make more money. If this is true giving $800 to 1 million wage earners would generate more activity in our economy but some would argue that maximum benefit has not been achieved with the money. Personally I think when the workers spend the money it will find its way to wealthy people and everyone benefits and the economic activity would multiply the initial 800 million many times.

    Money was made round to be shared around.

  50. diannaart

    Good point about the change of date of purchase, Wally. Somehow I doubt such a logical change would be factored into the stats – nor will they ever be – far too inconvenient.

    Another strange truth is the fact that for many decades since unions won the right to a fair wage and the idea of a safe working environment (neither ever fully implemented BTW), however, since the 80’s, since the divide between rich and poor reached a gap of canyonesque proportions, businesses were just as profitable and successful. Is it not coincidental that as the wealthy became even wealthier, we hear more complaints from the business sector of paying people for their work than way back when the wealth divide was not as vast. Curious.

    PS

    I do believe if one checks the antonym for “centre of excellence” there are no words listed, just a photo:

    http://tinyurl.com/o6kt39e

  51. Wally

    diannaart

    Should make a billboard with that picture to constantly remind LNP supporters of who they voted in.

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