Rex Jory: Why Aussie workers may soon need to choose between a high salary and a job

NO-ONE wants to take a pay cut but with a downturn in the global economy and salaries now at unsustainable levels, Aussies workers need to brace themselves for one, writes Rex Jory.

Rex is recovering from a heart attack at home with his wife Liz McGrice and is giving a first hand account on his experience.

AUSTRALIAN workers may be forced to accept pay cuts and reduced working conditions because of the new global financial downturn.

As unpalatable and ridiculous as this sounds, current salary levels are simply becoming unsustainable. We are in danger of living beyond our means.

Before you yelp your protests, a brief story. Last year I had lunch in a pleasant restaurant in Madrid.

The bill was so modest I asked the manager if it was correct. Everything was fine. He said the Spanish economy was so weak, and unemployment so high, that all costs were coming down.

“If I have a waiter working for 12 euros an hour and someone with good qualifications comes along and says he will work for 10 euros an hour, what am I expected to do?” he said.

“Of course I am going to hire someone cheaper. That situation applies everywhere – cleaners, delivery staff, suppliers. Prices come down as people get more and more desperate.”

I’ve since been to other Mediterranean countries suffering similar economic problems, particularly Greece and Italy. There is the same downward pressure on wages and other costs.

If the world economy continues to deteriorate it will be no surprise if Australia faces the same type of fall in wages.

Of course industrial arbitrators will insist on maintaining existing conditions, and unions will harass employers and workers who dare to defy accepted wage levels.

But, as has occurred in Europe, desperate people do desperate things.

Unemployment in South Australia is nudging eight per cent. Among young people seeking work it is three times that level.

Someone with a mortgage and a young family may be tempted to accept the indignity of below-award pay rather than rely on welfare cheques.

As the recent case involving 7/Eleven stores illustrates, it is not easy for Fair Work Australia to identify employers who are breaching award conditions and gather enough evidence to prosecute – particularly if workers are prepared to accept the money offered.

In any case, penalties for wayward employers are relatively small. The money saved by underpaying workers is worth the risk.

The International Labor Organisation says Australian wage-earners receive an average pay of $US2610 a month, the 15th highest average monthly wage in the world.

It’s no surprise workers from India, where the monthly average pay is $US295, the Philippines ($US269), Pakistan ($US255), China ($US656) or Malaysia ($US961) would be prepared to work for below-award wages in Australia.

The danger is the trend is spreading to Australian workers.

As unemployment rises, market forces are moving more quickly than the wheels of a union-dominated arbitration system can turn.

The increasing number of franchise businesses such as lawn mowing, gardening, home computers, television aerials and even accounting, boosts competition and lowers costs.

If you currently pay someone $20 to cut your lawn or wash your windows and a competitor offers to do it for $15, you are likely to take the lower offer.

Obviously the cheaper offer means lower wages for the person doing the mowing.

That can apply in many workplaces. It is easy to offer – or accept – cash in hand or off-the-book payments.

And lower wages may mean the difference between a company surviving or closing, a worker maintaining mortgage payments or losing the house.

Have your say: Do you think Aussie workers may start accepting lower wages to undercut other job-seekers? What should the government be doing about it? Comment below