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Category: Economics

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  • The Irrelevance of Minimum Wages to Future Inflation

    Labour Standards & Workers’ Rights, Macroeconomics, Unions & Collective Bargaining

    The Irrelevance of Minimum Wages to Future Inflation

    Minimum and award wages should grow by 5 to 10 per cent this year
    by Jim Stanford and Greg Jericho

    Authors

    Jim Stanford

    Greg Jericho

    Chief Economist

    Media release



    Increasing minimum wage would not drive inflation up: new report

    A significant increase to the minimum wage, and accompanying increases to award rates, would not have a significant effect on inflation, according to new analysis by the Centre for Future Work at the Australia Institute.
    The analysis examines the correlation between minimum wage increases and inflation going back to 1997, and it finds no consistent link between minimum wage increases and inflation.

    The report, co-authored by Greg Jericho (Policy Director) and Jim Stanford (Director), finds that a minimum wage rise of between five and 10 per cent in the Fair Work’s Annual Wage Review, due in June, is needed to restore the real buying power of low-paid workers to pre-pandemic trends, but would not significantly affect headline inflation.

    Key findings of the report include:

    • Last year’s decision, which lifted the minimum wage by 8.65 per cent and other award wages by 5.75 per cent, offset some but not all of the effects of recent inflation on real earnings for low-wage workers.
    • At the same time, inflation fell by 3 full percentage points.
    • There has been no significant correlation between rises in the minimum wage and inflation since 1997.
    • Raising wages by 5 to 10 per cent this year would offset recent inflation and restore the pre-pandemic trend in real wages for award-covered workers.
    • Even if fully passed on by employers, higher award wages would have no significant impact on economy-wide prices.
    • A 10 per cent increase in award wages could be fully offset, with no impact on prices at all, by just a 2 per cent reduction in corporate profits – still leaving profits far above historical levels.

    “Australia’s lowest paid workers have been hardest hit by inflation since Covid. There is a moral imperative to restore quality of life for these Australians and this analysis shows that there is no credible economic reason to deny them,” Jericho said.

    “It’s vital the Fair Work Commission ensure that the minimum wage not only keeps up with inflation, but also grows gradually in real terms – as was the trend before the pandemic.



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    Factsheet
    Increasing minimum wage would not drive inflation up: new report

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  • Submission to the Reserve Bank Reforms 2023 bill

    Macroeconomics

    Submission to the Reserve Bank Reforms 2023 bill

    by Matt Grudnoff

    Author

    Matt Grudnoff

    Senior Economist

    The Australia Institute argued that the RBA review’s proposal to remove the Australian Parliament’s power to override the RBA on monetary policy is wrong.

    In Australia’s democracy ultimate responsibility for something as important as monetary policy should rest with the parliament. This is because the Australian Parliament is ultimately responsible to the Australian people, while the RBA board is not.



    Full Submission




    Factsheet
    Chalmers is right, the RBA has smashed the economy

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  • Fixing the work and care crisis means tackling insecure and unpredictable work

    Fixing the work and care crisis means tackling insecure and unpredictable work

    by Fiona Macdonald in The New Daily

    Fiona Macdonald

    Acting Director, Centre for Future Work

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    Originally published in The New Daily on March 8, 2024

    The Fair Work Commission is examining how to reduce insecurity and unpredictability in part-time and casual work to help employees better balance work and care.

    The Commission is reviewing modern awards that set out terms and conditions of employment for many working Australians to consider how workplace relations settings in awards impact on work and care. This follows a 2023 finding by the Senate Select Committee Inquiry into Work and Care last year that there is a “work and care crisis”.

    The Select Committee’s final report noted “too many Australians are working in conditions that lack predictable hours and thus pay”, making it difficult to manage their care responsibilities with paid work.

    Insufficient income to meet family needs, inability to plan, inability to access suitable care, high stress levels and lack of time for life are some of the negative impacts of insecure and unpredictable part-time and casual work for workers with caring responsibilities.

    Women are overrepresented in part-time and casual jobs, as they continue to provide most unpaid care for children, elderly parents, and sick or disabled family members. Among women, casual employment is most common among 15 to 34 year-olds, while for men it is highest among those aged 65 years and older. Women’s casual employment is linked to child-rearing.

    Pay rates in casual jobs are often lower than for employees in equivalent permanent part-time and full-time jobs, despite casual loadings. Underemployment is also high and unpredictable working hours are common among casual and part-time employees, including in services sectors such as retail and care. In both sectors, insecure casual jobs provide workers with very little control over their work hours. Lack of control over hours is often a feature of permanent part-time jobs as well as casual jobs

    In a job with unpredictable hours it can be extremely difficult to organise and manage the costs of care. For example, for parents, uncertainty of working hours and income can make access to reliable and affordable childcare impossible. Unpredictable short-hours rosters can make it barely worth working at all as income may not cover the costs of formal childcare.

    Good quality, secure part-time jobs have long been regarded as essential for greater gender equality in employment, including as part-time jobs can support better sharing of care among men and women. However, the expansion of part-time work in the Australian economy since the 1980s has been an expansion of casual and part-time jobs that are highly insecure, often low-paid and with poorer conditions, protections and entitlements than most full-time jobs.

    It is possible to make casual and part-time jobs more secure and predictable. The Fair Work Commission’s analysis of industrial awards shows that there are many provisions in awards applying to part-time and casual employment that contribute to insecurity and lack of predictability. Award provisions include, for example, short minimum payments periods, broken shifts, poor guarantees around minimum and regular hours of work, little or no payment for travel time between different work locations, little or no notice of roster changes and poor compensation for being on-call.

    Secure work and a living wage are fundamental to good work and care arrangements. Secure work doesn’t just mean ongoing work or protection from unfair dismissal. Secure work entails adequate and predictable work hours, reasonable flexibility of working time, compensation for unsocial hours, safety at work and access to union representation.

    Worker-carers should also have rights to carer’s leave and personal leave, regardless of their employment arrangements. Systems of portable leave entitlements could help all workers manage care and work at all stages of their working lives. These and other leave entitlements would have the benefit of supporting a better sharing of care.

    The Fair Work Commission’s will complete its review in the middle of 2024. It is to be hoped that this leads to improved working conditions for worker carers, enabling men and women to care and work without paying the price through job insecurity.


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  • Aged care wage rise decision crucial for elderly Australians

    Aged care wage rise decision crucial for elderly Australians

    by Fiona Macdonald

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    The Australia Institute says wage rises for aged care workers will improve the lives of elderly Australians after a crucial Fair Work Commission decision.

    The Commission today announced rises between 2 and 13.5 per cent for aged care workers from July 2024.

    “Today’s decision is crucial to supporting safe and quality care for elderly Australians, and the sustainability of the aged care workforce,” said Dr Fiona Macdonald, Policy Director at the Australia Institute’s Centre for Future Work.

    “For too long, aged care work has been undervalued and low paid. The Fair Work Commission’s decision to award additional pay rises, on top of an interim 15 per cent wage rise, is vital to fixing this.

    “The introduction of a new classification structure will also provide the basis for the ongoing recognition and valuation of aged care work.

    “It’s essential the federal government commits to fully funding the additional increases of up to 13.5 per cent from the start of the next financial year.”

    “The exclusion of indirect care workers from today’s decision is a lost opportunity to support the lowest paid workers.”


  • Most Coalition voters back right to disconnect

    Most Coalition voters back right to disconnect

    by Fiona Macdonald

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    Two-thirds of Coalition voters back newly legislated protections for employees’ right to disconnect from emails and calls outside of work, new research from the Australia Institute shows.

    It comes as the federal opposition pushes amendments to the Fair Work Amendment Bill 2024 – subject to a Senate inquiry due to be handed down today – to scrap the right. The Coalition has vowed to overturn the legislation if it wins government.

    Key findings: 

    The Australia Institute’s Centre for Future Work surveyed 1,017 Australians about the right to disconnect in late January, before the bill passed parliament. 

    • Three-quarters (76%) supported the federal government legislating a right to disconnect, while 11% were opposed.
    • Support for legislating a right to disconnect was high across the political spectrum.
    • Greens (90%) and Labor voters (83%) were the most supportive. This was followed by two-thirds of Coalition voters (66%). Just 18% of Coalition voters opposed it.
    • Three in four ‘independent/other’ voters (77%) and 61% of One Nation voters supported legislating a right to disconnect.

    “The opposition appears determined to remain out of touch with its own voters by pledging to roll back the very policies they support,” said Dr Fiona Macdonald, Policy Director, Industrial and Social at the Centre for Future Work.

    “The Coalition joined the business lobby in claiming the right to disconnect would cause the sky to fall in. They were wrong. Instead, this survey finds most Australians across the political spectrum back the legislation to stop work encroaching into their personal and family time.

    “We know that unpaid overtime is endemic. Our research shows employers are stealing more than 280 hours a year from their workers. This average employee loses $11,055 a year to unpaid overtime.

    “The implementation of the right to disconnect is a commonsense step towards rectifying this exploitative imbalance.”

    The Senate Education and Employment Legislation Committee is due to report on the Fair Work Amendment Bill 2024 today.


    Related research



    Polling – Right to Disconnect



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  • Polling – Right to Disconnect

    Future of Work, Labour Standards & Workers’ Rights

    Polling – Right to Disconnect

    by Fiona Macdonald

    Author

    Fiona Macdonald

    Acting Director, Centre for Future Work

    Media release



    Most Coalition voters back right to disconnect

    Survey respondents were asked if they would support or oppose the federal government legislating a right to disconnect that would direct employers to avoid contacting workers outside of work hours, unless in an emergency.

    Key Findings:

    • Three in four Australians (76%) support the federal government legislating a right to disconnect.
    • One in nine Australians (11%) oppose legislating a right to disconnect.
    • A majority of Australians across all voting intentions support legislating a right to disconnect (61% to 90%).



    Full report



    Disclosure Statement




    Factsheet
    Most Coalition voters back right to disconnect

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  • Submission to the Fair Work Commission Modern Award Review 2023-2024, Work and Care

    Gender at Work, Insecure & Precarious Work, Labour Standards & Workers’ Rights, Wages & Entitlements

    Submission to the Fair Work Commission Modern Award Review 2023-2024, Work and Care

    by Fiona Macdonald

    Author

    Fiona Macdonald

    Acting Director, Centre for Future Work

    The Fair Work Commission’s Review of Modern Awards 2023-24 is considering the impact of workplace relations settings on work and care. This submission argues for good quality, secure part-time jobs to achieve more gender-equitable sharing of care and to support women’s full economic participation.



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  • On International Women’s Day: How the Fair Work Commission Can Really Take On the Gender Pay Gap

    On International Women’s Day: How the Fair Work Commission Can Really Take On the Gender Pay Gap

    by Lisa Heap in The Conversation

    Lisa Heap

    Senior Researcher

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    Originally published in The Conversation on March 8, 2024

    On occasion of International Women’s Day, the Centre for Future Work’s Senior Researcher Lisa Heap reviews the opportunities to use recent industrial relations reforms to more ambitiously address Australia’s gender pay gap.

    This International Women’s Day, it is time to call on Australia’s workplace umpire, the Fair Work Commission, to finally close the gender pay gap.

    Half a century after the commission’s predecessor granted women “equal pay for equal work” in a landmark case in 1969, the gap remains between 12% and 21%.

    Amendments to the Fair Work Act by the incoming Labor government in 2022 gave it new tools to close the gap by addressing the undervaluation of work in traditionally female-dominated occupations.

    If it uses these tools to their full potential, 2024 will be a landmark year in the genuine achievement of equal pay for equal work.

    What we’ve been doing hasn’t much worked

    Traditionally in Australia, addressing gender-based undervaluation has relied on two approaches.

    The first has been to argue the business case for gender equality – convincing employers they’ll be rewarded for “doing the right thing”.

    The second has been to bring equal pay cases to tribunals.

    Unfortunately, neither approach has been successful. In particular, pushing for equal remuneration through tribunals has been time-consuming and expensive.

    These tribunals, historically working on models of male full-time wage earners, have struggled to understand the undervaluation of work performed predominantly by women.

    The commission’s new tools

    The commission’s act has been rewritten to require it “to promote job security and gender equality.”
    It also has the power to make equal remuneration orders either on its own initiative or on application in order to bring about equal pay for work of equal or comparable value.

    A further new development is the establishment of expert panels to assist in gender-related cases. Advice from gender experts should assist in overcoming historical gender biases in commission decisions.

    Perhaps the most promising tool is the change to the commission’s modern awards objective, which requires it to eliminate gender-based undervaluation of work and provide workplace conditions that facilitate women’s full economic participation each time it reviews an award.

    Among other things, this requirement is likely to result in provisions that ensure part-time work is treated equally to full-time work and ensure a better balance between work and caring responsibilities.

    Amending awards is likely to be particularly important for women given that almost three in five of the workers on awards are women. Men are mainly on negotiated agreements.

    If the commission wanted to, it could hold a wide-ranging inquiry into the many factors that have contributed to gender-based undervaluation of women’s work.

    It could also review entire industries and occupations that are female-dominated, upgrading multiple awards at the same time. This would avoid lengthy and costly reviews of individual awards.

    What’s likely in 2024

    The Fair Work Commission’s resolve to make lasting change will be tested by several matters currently before it.

    The commission is due to issue its final decision in the case lodged by the Australian Nursing and Midwifery Federation, the Health Services Union, and the United Workers Union on the value of the work done by workers in aged care.

    An initial interim decision delivered in 2022 awarded some – but not all – of these workers a 15% increase, finding that work in feminised industries had been historically undervalued and the reason for that undervaluation is likely to be gender-based”.

    Workplace Relations Minister Tony Burke backed the decision, saying it was merely the “first step”.

    Another application, for nurses and midwives outside of aged care, was lodged by the Australian Nursing and Midwifery Federation in February this year.

    The commission has already started the process of grappling with gender-based undervaluation in modern awards, commissioning research that documents the segregation of women and men into different occupations and industries.

    Further research documenting the history of a select group of female-dominated modern awards and identifying the extent to which common elements indicate gender-based undervaluation, is due to be released in April.

    It will feed into the annual wage review due by the middle of the year.

    How to be bold

    Gender-based undervaluation of women’s work won’t be eradicated by incremental adjustments.

    Here are three bold steps the commission could take:

    • grant a minimum interim 12% increase (one estimate of Australia’s national gender pay gap) across the board for female-dominated awards in this year’s annual wage review
    • develop new systems for classifying work and ascribing work value, breaking with the previous standards built around skills and qualifications in male dominated occupations
    • better consider the uneven bargaining power in industries such as nursing where governments fund care work and try to restrain costs.

    The changes to the Fair Work Act that allow multi-employer bargaining are a start, but unlikely alone to correct the undervaluation of women’s work.

    In female-dominated industries where collective bargaining is non-existent or ineffective, the commission should step in and further increase wages.

    The Fair Work Commission has been given the tools. This should be the year it applies them.


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  • Aged care reforms fall short on quality, safety

    Aged care reforms fall short on quality, safety

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    Mandating sector-wide aged care training requirements would make elderly Australians safer while bolstering workforce stability, according to a new analysis by the Australia Institute.

    The Centre for Future Work warns that reforms due to come into effect from July – including screening requirements to exclude unsuitable workers and a mandatory code of conduct – do not go far enough to ensure the quality and safety or recognise workers’ skills.

    Key findings:

    • The report, Professionalising the Aged Care Workforce, calls for the mandated, sector-wide professional registration and minimum aged care worker qualifications that require all workers to have at least a Certificate III
    • Costs would be minimal because two out of three personal care workers already have a Certificate III or higher qualification
    • Mandating minimum training requirements would lead to higher quality and safer care as well as better career paths for workers to help meet the growing and complex needs of an ageing Australia
    • Two of every three personal care workers already hold a Certificate III or higher qualification
    • Minimum aged care worker qualifications to Certificate III level and access to ongoing professional development were key recommendations of the 2021 Aged Care Royal Commission

    “This is about long-term sustainability for the aged care workforce,” said Dr Fiona Macdonald, Policy Director, The Centre for Future Work at the Australia Institute.

    “Setting a minimum education standard for all aged care workers would lead to higher quality care. It would also allow for the recognition of the skills required to care for society’s most vulnerable.

    “Four out of five aged care workers are women and care work has long been undervalued and low paid. Fixing this is vital for people receiving care, workers and our communities.

    “Workers are facing new demands to comply with screening and obligations to meet standards under a new code of conduct. Yet, there is still no formal recognition of workers’ skills or system-wide requirements for accredited training.

    “While the government is moving to screen out unsuitable aged care workers, it is failing to give those working in or considering aged care meaningful professional development or options for career progression.

    “Mandatory and coordinated accreditation would allow workers to have their skills recognised, boost job satisfaction and make the industry more attractive as a long-term career.

    “The Aged Care Royal Commission has been crystal clear about the need for these reforms. It’s beyond time to deliver them.”


    Related research



    Professionalising the Aged Care Workforce



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  • Professionalising the Aged Care Workforce

    Gender at Work, Labour Standards & Workers’ Rights

    Professionalising the Aged Care Workforce

    The case for worker registration and a mandatory qualification
    by Fiona Macdonald

    Author

    Fiona Macdonald

    Acting Director, Centre for Future Work

    Media release



    Aged care reforms fall short on quality, safety

    This paper presents the case for an aged care worker registration and accreditation scheme

    In accordance with the recommendations of the Royal Commission into Aged Care Quality and Safety (Aged Care Royal Commission) the proposed scheme includes a requirement for attainment of a Certificate III qualification and engagement in ongoing training or continuing professional development (CPD).



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