When the Fair Pay Commission holds its annual National Minimum Wage Case hearing in mid-2008, the major employers will propose cuts to real wages. As food, petrol and housing prices go up (along with CEO salaries) bosses want to keep workers’ wages down.

The hearing determines wages for 1.6 million workers on award-based wages, who are outside of collective agreements and who rely on this one wage rise per year to keep up with inflation.

The Australian Council of Trade Unions (ACTU) is proposing a $26 per week rise, equivalent to 68 cents per hour. This would bring the weekly minimum rate up from $522.12 to $548.12 (or up to $14.42 per hour).

More than a million low paid workers went backwards in real terms by up to $44 a week or $2200 a year over the last three years, according to ACTU research. In 2007, the national wage rise was only $10 a week.

Jeff Lawrence, ACTU Secretary, said: “Pay increases of corporate executives and directors have risen by an astronomical 30 percent in the last 12 months.” Professor Ian Harper, the head of the Fair Pay Commission, received a 47 per cent increase in 2007.

The Australian Industry Group (AIG), representing big business, is proposing 35 cents per hour ($13.30 per week)-2.5 per cent, which is less than inflation, around 3.6 per cent. The Australian Chamber of Commerce and Industry (ACCI), representing small business, is proposing a $10 per week rise.

The Labor government is tipped to favour an $18 a week rise-approximately the rate of inflation.

The business councils argue that they cannot afford larger wage rises and that, because of the tight labour market, wages are rising as workers change jobs. The ACCI argues that wage rises should reflect productivity improvements.

Yet profits have been increasing at the expense of wages. The proportion of economic output going to workers’ wages plunged from nearly 65 per cent in the early 1980s to about 54 per cent in 2006. This was achieved by a combination of factors, including industry restructuring, wage restraint under the previous ALP government’s Accord, and enterprise bargaining.

Under the Liberals, workers paid for their own wage rises through increased productivity-working longer and harder, with reduced allowances.

At the same time Australia’s richest 200, according to the Business Review Weekly (BRW) boosted their total wealth by $128.6 billion, 26.7 per cent in the year 2006-07 alone.

According to BRW, the average net worth of a member of this group is now $688 million, and the average increase was $180 million for 2006-07-equivalent to $3.46 million per week or $91,050 per hour (based on a 38 hr week). James Packer is now worth $7.25 billion.

Yet workers are being told that a $26 rise is impossible because of inflation. This message is coming from the bosses, the government and the media. They all say that workers should take into account the proposed tax cuts and improvements to the Family Tax Benefit, which would improve take home pay.

Wage rates generally reflect the cost of living and industrial power of workers. Under capitalism the basic cost of wage labour depends on the cost of reproducing the worker and future generations, i.e. the cost of living. If wages are at low levels compared with profits then this also reflects the weaknesses of union bargaining power.

Inflation is not being caused by wage rises. Prices are not determined by wages; inflated prices have been caused by increased credit that was easy to obtain until the recent interest rate hikes. This was exacerbated by Liberal government policies that encouraged speculation, such as negative-gearing and reductions in capital gains tax.

Wage cuts won’t reduce inflation but they will continue to drive down our standard of living.

As Jeff Lawrence said: “The Australian public voted to get rid of Work Choices so that their living standards would be protected.”

Kevin Rudd should be speaking out to support at least the ACTU $26 claim and attacking the real causes of inflation-abolishing negative gearing and restoring capital gains tax-not joining the chorus of the anti-worker rich.

By Judy McVey

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