Workers turning to own means, not unions, to get pay rises

There was a time not so long ago when a federal treasurer would have courted serious controversy by telling workers, after years of wage stagnation, that the best way to secure a pay rise was to find another employer who’ll pay them more.

If this advice was offered only months out from an election, as inflation was starting to take off, and pressure for an interest rate rise was increasing, the controversy meter would have gone into the red zone.

Josh Frydenberg says the best way for workers to get a wage rise is to find a new employer who will pay more.Credit: Alex Ellinghausen

But when Josh Frydenberg did just that in a speech to an employer group on Monday, it was seen as business as usual. He got some friendly headlines and his declaration vanished quickly in the maw of the daily news cycle.

Rather than urging the members of his business audience to pay their employees more if their value to the companies had increased, instead it was up to the employees to go out into the market, ditching their existing work arrangements and relationships, and having to prove themselves all over again at another business.

If he outraged people in the same way as Joe Hockey’s 2015 solution to worsening housing affordability, which was to “get a good job”, there wasn’t any evidence of it. Indeed, it could well be that many and possibly most workers are okay with his suggestion, even if they won’t take it up.

The ho-hum response to Frydenberg’s contribution tells us a good deal about one of the most profound changes in Australian society in recent decades: the active decision by the vast bulk of wage and salary earners to turn their backs on unions and to accept low levels of agency when it comes to bargaining for better pay.

A move away from the unions has left workers with less bargaining power.Credit: Rob Homer

The consequences of these choices extend beyond workplaces, households, and the economy into politics – especially the condition and nature of the Labor Party. From the early years after Federation right up to the 2007 election, fought over John Howard’s WorkChoices regime, wages policy was regularly front and centre of election campaigns.

The principle of workforce-wide wage justice, of a bond of mutual respect between employers and employees based on simple notions of fair dealing, still lingered in the national consciousness. That was its last gasp.

In the four elections since 2007, wages and incomes haven’t featured. This is partly because the Rudd government’s Fair Work system, merely took off WorkChoices’ rough edges on individual contracts and didn’t make the enterprise bargaining system more robust. In this environment, because so few workers expect rewards from acting collectively, they prefer to rely on their own resources.

However, the unions’ decline was underway well before then. In 1976, during Labor’s darkest days in the wake of the dismissal of the Whitlam government, 51 per cent of workers were unionists. In 1992 – Paul Keating’s first full year as prime minister – the proportion was still 40 per cent. In 2007, it was 19 per cent. Today it’s 14 per cent.

With much of the workforce atomised into individual bargaining units, it’s little wonder that average real wage growth is so sluggish. The government’s own mid-year economic forecast, issued eight weeks ago, calculated that inflation would outstrip wage rises in this financial year and there would be little change to that over the forward estimates.

But it’s not just household earnings where de-unionisation has had an effect. At a national level, it has fundamentally weakened the Labor Party. The federal ALP seems stuck with a primary vote in the 33-35 per cent range, and it will need substantially more than that if it is to win office in its own right.

The gradual reduction of the unions to a collection of rump organisations has permanently denied the Labor Party millions of potential supporters: men and women who would be receiving union communications and, most important of all, feeling like they were part of a mass-based labour movement.

A better deal on incomes featured prominently in Labor’s past two election wins from opposition. Bob Hawke promised an immediate return to automatic cost of living pay rises for all workers and Rudd pledged to overturn the unpopular WorkChoices. We’re yet to see if Anthony Albanese wants to offer something as substantial.

One policy area he has opened up is his criticism of the established practice of importing workers to fill gaps in the domestic workforce which, handled properly, could provide a strong contrast with the government, which is keen to resume and expand the practice as our borders reopen.

Whether Albanese as prime minister would be able to resist heavy pressure from the employer and business lobby groups, who like the labour importation model very much because it keeps wage pressures down, is another matter. Particularly when most of the workers already here don’t seem especially fussed by their lack of bargaining muscle.