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  Issue No 117 Official Organ of LaborNet 26 October 2001  

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Unions

A Living Wage


The ACTU this week unveiled its claim for the 2002 Living Wage Case. Here's what they'll be arguing.

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As part of it's 2002 living wage campaign the ACTU will be seeking a $25 a week pay rise for Australia's 1.7 million low-paid award wage workers.

While there are many important issues to be considered in this election campaign, the needs of low-paid workers should not be forgotten.

The St Vincent de Paul Society recently described the burgeoning gap between the wealthy and the poor and disadvantaged as 'the single most important problem facing Australia.' The Smith Family has warned that "In Australia today, having a job no longer guarantees that you and your family will not be in poverty."

Sixteen months after the introduction of the GST, low and middle-income Australians are struggling under an avalanche of GST related price rises. The most recent ACCC prices survey estimates that despite promises fresh and unprocessed food prices alone have increased by more than 10.3% since the GST was introduced.

Despite the Federal Government's claims to be champions of the low-paid, for four of the past five years John Howard and Peter Costello have argued that any pay rise for the lowest-paid in our community should be capped at just $8 a week. Had the Industrial Relations Commission taken the Government's advice Australia's lowest-paid employees would have received a real-wage pay cut of around 4% since 1998.

No one believes the Federal Government when they claim to have the interest of the low-paid at heart. Welfare agencies like ACOSS, Anglicare Victoria, The Society of St Vincent de Paul and the National Coalition Against Poverty who have all expressed concerns about the growth of income inequality and the working poor in Australia. Low-paid Australians and their families are doing it tougher than ever as the real impact of the GST on prices starts to hit home.

Low-paid workers need a decent pay rise to maintain their living standards.

Its time that John Howard and Peter Costello admitted that their GST has hurt low-income working families and supported a decent pay rise for low-paid workers."

Claim Summary

a)The claim

The ACTU Living Wage 2002 claim is for $25 a week increase in all award rates of pay.

If the claim is successful the Federal Minimum Wage will increase:

� from the current $413 a week, $10.88 an hour or $21,550 a year,

� to $438 a week, $11.54 an hour or $22,860 per annum.

Under the claim the key Metal Industry fully qualified trades-person's rate will increase from:

� from the current $507 a week, $13.35 an hour or $26,450 a year,

� to $532 a week, $14 an hour or $27,750 per annum.

b)Who will benefit from the claim?

Around 1.7 million mostly low paid, award wage, workers rely exclusively on ACTU Living Wage pay increases to maintain and improve their standard of living. These workers and their families will benefit most from the ACTU claim.

By claiming a flat $25 a week increase rather than a percentage, the ACTU claim also ensures that the biggest benefits of the pay rise are delivered to the lowest paid in the community.

c)What about part time & casual employees?

No other group of workers relies more on ACTU Living Wage pay increase to maintain their living standards than part time and casual workers.

Almost 60% of all private sector award wage workers are part time workers. Nearly half of the award wage workforce are engaged as casuals.

If the ACTU's claim is successful, casual and part time workers will receive an increase in their hourly rate of pay. For example, under the claim the base hourly rate of pay for a part-time adult worker on the Federal Minimum Wage would increase from $10:88 an hour to $11:54 per hour.

d)Why $25?

Increasing wage inequality and the growing number of working poor in Australia makes a significant increase for the low paid imperative.

Having a job in Australia is no longer guarantee against poverty.

According to the welfare agency The Smith Family, one in five Australians living in poverty now live in households where wages and salaries are the main source of income (Smith Family, Financial Disadvantage in Australia).

As income inequality in Australia grows wider, low-paid workers and their families are falling further behind.

For the bottom 20% of Australian households where the main source of income is wages and salaries, average weekly expenditure exceeds average weekly income by $50 per week (ABS Cat No. 6535.0, Household Expenditure Survey).

The National Centre for Economic and Social Modelling recently concluded that income inequality in Australia has increased since 1990. The wage and salary income for the bottom 40% of households has fallen between $13 and $85 per week. Meanwhile, high-income households continued to increase their share of national income. (NATSEM, Inequality in the 1980s and 1990s).

Income inequality and the growing number of working poor in our community is an increasingly important social and economic issue. It must be addressed.

The $25 a week increase being claimed by the ACTU is economically responsible and sustainable has been targeted at the lowest paid in our community. The pay rise will provide a significant and much needed increase to low-paid workers and their families.

More details on the working poor and growing inequality are detailed on pages 8 to 13.

e)GST hits low-paid hard

Sixteen months after the Federal Government introduced its GST the real impact of the tax on prices is clearer.

Immediately following the GST's introduction a vigilant and aggressive Australian Competition and Consumer Commission (ACCC) spooked many businesses into holding back on GST price rises.

But in recent months shoppers have been hit by a wave of GST induced price hikes as businesses have sought to relieve themselves of built-up GST cost pressures and pass the real costs of the tax on to consumers.

A recent survey by the ACCC confirms what every low and middle-income Australian knows - John Howard's GST has forced prices up far beyond the estimates provided by the Government prior to the tax's introduction.

According to the most recent ACCC prices survey the cost of fresh food has increased by more than 10.3% since John Howard and Peter Costello introduced the GST.

The price of bread, which the ACCC predicted would fall as a result of the GST, is up 5.1% since the tax was introduced. Car running costs and alcohol and tobacco products have gone up by 5.1% and 11.2% respectively. The cost of childcare, which was supposed to fall under the GST, has gone up by more than 4.6% according to the ACCC.

Other promised GST price reductions simply haven't eventuated.

Breakfast cereal up 1.4%, tea up 4.4%, chicken up 1.4%, salt up 3.8% and apples up 23.4% were all supposed to get cheaper as a result of the GST.

Consumers have also been hit by a rash of sneaky packaging changes by food manufacturers seeking to disguise GST price rises by offering smaller portions of standard grocery items.

A recent 'pricewatch' survey by Melbourne radio station 3AW found that 8 of the 56 or 15% of the regular grocery items monitored had been repacked into smaller portions since the introduction of the GST.

And there are more price rises in the pipeline. Two Victorian electricity retailers have recently announced their intention to increase electricity charges to Melbourne households by 17.3 and 16% respectively from January next year.

These type of price rises impact particularly on the low-paid who spend a higher proportion of their household budgets on everyday living expenses.

The result is that low-paid workers and their families are slipping further and further behind.

The tax cuts associated with the Government's GST were also outrageously skewed toward the better off in the community.

Someone earning $100,000 a year received a tax cut of $62.80 a week from Peter Costello, a worker on the federal minimum wage of just over $400 got a tax cut of just $9.15.

In fact, though almost 70% of Australian taxpayers earn less than $40,000 a year, only 30% of tax cuts went to this group. It was the richest 30% of Australian taxpayers who received 70% of every tax cut dollar Mr Costello handed out.

Low-paid workers need a decent pay rise to maintain their living standards.

Its time that John Howard and Peter Costello admitted that their GST has hurt middle and low income working families and supported a decent pay rise for Australia's 1.7 million low-paid award wage workers.

f)Why the claim economically responsible?

While the ACTU claim will deliver significant benefit to low-paid workers and their families, its affect on the overall rate of inflation will be negligible.

A $25 increase in award rates of pay will have a net impact on total wages of just 0.2%. Th impact of the claim on CPI would be less than 0.1%.

g)What is the percentage increase?

The average increase for full-time non-managerial employees under the ACTU's $25 a week claim is 3.8%. (calculated using ABS Cat.6306.0 Employee Earnings and Hours, May 2000). The increase at the Federal Minium Wage is 6%.

h)Why the claim won't cost jobs?

There is little doubt that conservative politicians and some in the business community will claim that any increase for the lowest-paid in our community will cost jobs.

There is no evidence to support this claim.

The Australian Industrial Relations Commission has consistently held that moderate wage increases do not cost jobs.

Despite this, at every Living Wage Case since 1996 the Federal Government has unsuccessfully tried to argue that the ACTU's claim will cost jobs and has produced economic modelling to support this claim.

This modelling has been thoroughly discredited in Living Wage Case proceedings.

In fact the modelling used by the Federal Government in recent Living Wage Cases is the same economic model which predicted that the GST would be good for the economy. We now know that the GST gave Australia its first quarter of negative growth for 9 � years.

i)How does the claim compare with other pay rises?

The ACTU's $25 a week wage claim for low paid employees is moderate compared with wage rises received by others in the community.

Average Weekly Ordinary Time Earnings increased by 5.3% to May 2001. The Wage Cost Index rose by 3.7% to June 2001.

According to the Australian Centre for Industrial Relations Research and Training, average wage rises for employees covered by collective agreements were 4.3% to June 2001. (ACIRRT, ADAM Report 2001)

These increases are well behind those achieved by the award wage employees targeted by the ACTU's $25 a week claim. Based on ABS data, full time non-managerial award wage workers received an average pay rise of only 2.6% this year.

In response to last year's ACTU Living Wage Claim the Australian Industrial Relations Commission granted award wage workers increases ranging between just $13 and $17 a week.

The ACTU's $25 a week claim is also moderate when compared with pay increases accepted by community leaders.

When politicians and business leaders lecture the low-paid about wage restraint it is important to remember:

� the Prime Minister accepted a $179.50 per week increase earlier this year, more than 7 times the ACTU claim.

� Peter Costello, the Treasurer received a $129.50 per week increase, more than 5 times the ACTU claim.

� Sydney's Daily Telegraph reported that senior executives at Australia's worst performing companies awarded themselves pay rises of 265% last year. (Daily Telegraph 15/10/01, Bosses' pay goes up while profits plunge).

j) Award workers are low paid workers

The most recent ABS Employee Earnings and Hours survey in May 2000 showed that amongst adult private sector employees on award rates 31% earned less than $12 per hour. This is just $456 per week or $23,780 a year.

The same survey confirmed that almost three in four or 73% of adult award wage employees earn less than $15 per hour, $570 a week, or $29,720 a year.

k) Timetable and key dates

Mid November 2001 ACTU lodges Living Wage 2002 application with Australian Industrial Relations Commission (AIRC)

Early December 2001 Full bench of AIRC conducts Directions Hearings

February 2001 ACTU to file and serve written submissions and witness evidence with AIRC

March 2002 AIRC hears oral submissions from ACTU and others

May 2001 AIRC hands down Living Wage Case 2002 decision

The Working Poor in Australia

i) the Smith Family Report

In November last year the Smith Family released its report Financial Disadvantage in Australia 1999: The Unlucky Australians?

Key findings of the report included:

a) Nearly 10% of all poor Australians live in a household where the head is a full-time wage and salary earner. [page 8]

b) For 19% of Australians living in poverty the main source of family income is wages and salaries. [page 9]

c) Using the author's preferred poverty measure, 154,000 children and 297,000 adults live in poverty in households whose principal source of income is wages and salaries. [page 42]

The report concluded that:

� "for one in every five poor Australians, the wages and salaries are large enough to be the main income source but still not sufficient to pull their families out of poverty." [page 9] and that,

� "In Australia today, having a job no longer guarantees that you and your family will not be in poverty." [page 22]

ii) ABS Household Expenditure Survey data

The ABS Household Expenditure Survey data released late last year measures the financial health of Australian households. The survey found that Australia's poorest working households are doing it tough and their situation is getting worse.

Amongst the poorest 20% of Australian households where the principle source of income is wages and salaries the survey found that:

� Almost 70% said their standard of living was worse or the same as two years ago.

� Average weekly expenditure of $562 exceeds average weekly income of $510 by more than $50 a week.

� Almost 35% or 284,854* households said that they haven't had a holiday away from home for just one week a year because they couldn't afford it.

� 26% or 212,212* households said they couldn't raise $2,000 in an emergency.

� 22% or 179,564* households said they could not afford to have a night out once a fortnight.

� More than 20% or 166,505* households reported having not paid utilities bills due to a shortage of money.

� Almost 15% or 119,165* households said they could not afford a special meal once a week.

� More than 14% or 115,900* households said they had purchased second hand clothes because they couldn't afford new ones.

� Almost 6% or 48,156* households said they could not afford to have friends or family over for a meal once a month.

� More than 5% or 41,626* households sold or pawned something due to shortage of money.

� Almost 4% or 30,199* households went without meals due to shortage of money.

� Nearly 4% or 31,016* households were unable to heat their home due to shortage of money.

� Almost 3% or 22,037* households had sought assistance from welfare or community organisations due to a shortage of money.

*estimated number of households based on ABS population data.

iii) St. Vincent de Paul Society

Two Australias - addressing inequality & poverty

The St. Vincent de Paul Society report Two Australias - Addressing Inequality and Poverty published in May 2001 contains wide ranging recommendations aimed at addressing what it describes as "the single most important problem facing Australia ... the burgeoning gap between the wealthy and the poor and disadvantaged".

Key findings of the report include:

� That in the five-year period between 1993/4 and 1998/9 the bottom 20% of Australian households received an average weekly increase in income of $9 or 5%. Meanwhile the average increase for the top 20% of households over the same period was $343 a week or 23.4%. [pp. 2 & 4]

� "A disturbing more recent development has been the growth of working poor.." [p. 10]

� The majority of low-income earners spend more than their income. [p.12]

� The wages system has a role to play in securing a more equal society. [pp. 14, 19 & 25]

� The impact of the GST and other price rises on low-income households is more than the "headline" CPI rate. [p. 23-4]

Releasing the report on 14 May 2001, St. Vincent de Paul Queensland President Tim O'Connor said, "the GST has been the biggest curse that's been inflicted on the poor in the last hundred years in Australian history."

iv) The Trend Towards Inequality

a) Profit share up, wages share down

The profit share of national income is at historically high levels. In September 2000 it was at its highest level ever. The wages share, on the other hand, is close to historic low levels.

The chart below shows wage and profit shares of national income for the period 1959 to 2000. The long-term trend for profit share has been upward since 1974. Healthy profit levels are absolutely essential for the well being of Australia's economy but the figures do show a long-term redistribution from wage and salary earners to company profits.

b)Rising income inequality

Within this diminishing share, the distribution of wages has also become more inequitable. Data, published by HSBC in its May 2001 Economics and Investment Strategy newsletter, shows that earnings inequality has increased sharply in the last four years.

In a recent paper on Trends in Income and Expenditure Inequality in the 1980s and 1990s, the National Centre for Social and Economic Modelling concluded that:

� Income inequality in Australia has increased since 1990.

� In the last 5 years expenditure inequality has also increased.

� There has been a growing gap between incomes at the top and the middle as well as the top and the bottom.

� Between 1989 and 1999 the ratio of the very top incomes (top 5%) to the bottom 10%, worsened by 14.1%.

� The top 10% of households receive 22.5% of income while the bottom 10% of households received just 2.7% of national income.

� The number of working poor in the bottom 10% of households has increased.

v)Welfare agency contacts for 'working poor' comment

A number of welfare agencies have recently made public comment about the growing income inequality and the 'working poor' in Australia.

The ACTU has briefed these agencies on its 2002 $25 living wage claim.

- Australian Council of Social Service

- St Vincent de Paul Society


------

*    Visit the ACTU

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*   Issue 117 contents

In this issue
Features
*  Interview: Brothers In Arms
Labour historian Marilyn Dodkin explains how she exposed ASIO ties with Labor Council's Cold War leadership.
*
*  Politics: Defending the Faith
Launching 'Brothers', Premier Bob Carr gave his own take on the allegations that union leaders worked with security agencies during the Cold War.
*
*  History: Surviving the Split
In this extract from 'Brothers' Marilyn Dodkin, looks at the manouverings around the establishment of the DLP.
*
*  International: Viral Attack
Postal unions in the USA are mobilizing to protect their members from the widening repercussions of an apparent bio-terrorist attack.
*
*  Unions: A Living Wage
The ACTU this week unveiled its claim for the 2002 Living Wage Case. Here's what they'll be arguing.
*
*  Campaign Diary: Week Three: Wave Them Goodbye
In a week when our boys and girls went off to war, Labor fought a desperate battle to fight the election on the home front.
*
*  Human Rights: Colombia's 'Dirty War' Against Unions
It might be tough being an organiser in Australia under the Howard Government, but spare a thought for Colombian trade unionists.
*
*  Review: Red Rag Unfurls
Ian Syson is an upfront, knockabout bloke. He heads up a new, small, independent publishing outfit called Red Rag Publications.
*
*  Satire: New Hope for Labor: Mackerras Tips Liberal Win
The electoral hopes of the Labor party have revived dramatically, after the perennially unreliable analyst Malcolm Mackerras forecast a huge victory for the Liberals.
*

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»  Malaysian Solidarity Action in Sydney
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»  Activists Notebook
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Columns
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»  The Locker Room
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»  Trades Hall
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»  Tool Shed
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Letters to the editor
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»  The Great Orwell Debate Continues ...
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»  In Defence of Nader
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