Restraint In Wages The New Mantra

The Age

Friday January 25, 2008

Ben Schneiders, Workplace Reporter and Misha Schubert, Canberra

CUTS should be made to runaway executive salaries and business profits rather than the pay of ordinary workers, unions have argued in a rebuff to demands for restraint in wages growth.

As the Rudd Government fights to bring inflation back under control, Deputy Prime Minister Julia Gillard yesterday backed Treasurer Wayne Swan's call for "wage restraint" - saying pay rises should only be based on productivity.

Business Council of Australia chief executive Katie Lahey added support, saying "inflationary pressures remain a clear risk in the Australian economy".

But ACTU secretary Jeff Lawrence told The Age that employees were not the cause of rising inflation and that instead business needed to make cuts.

"Workers are not going to take the brunt of that, there's been no restraint shown by employers when it comes to their profits or executive salaries," he said.

"I understand inflation is an issue for the Government and it's got to be addressed, but there's no way that workers are responsible for that or can or should bear the responsibility for it."Wage growth measured by the Labour Price Index has only increased about 4% a year in recent times - a figure that ANZ chief economist Saul Eslake said was remarkably low, considering unemployment was near three-decade lows.

In contrast, total chief executive pay for the top 100 listed companies rose 72% since 2001, a study last year by RiskMetrics found.

In the first sign of the ACTU's position on this year's minimum wage claim, Mr Lawrence said wages growth must at least match the Consumer Price Index rise for 2007, which was 3%.

"Minimum wages have got to keep pace with the rate of inflation; we are certainly not going to acquiesce in a position where real wages go backwards," he said.

He said the decentralised bargaining system meant the ACTU was in no position to trade off wages for improved social conditions as occurred under the accord in the previous federal ALP government.

Electrical Trades Union state secretary Dean Mighell went further, saying employees had to regain lost ground from rising living costs and wage increases of 5% to 6% would be justified.

"Workers generally have had 10 years of wage restraint or negative outcomes, while we've seen executive salaries absolutely go through the roof," he said.

"Wayne Swan and Julia Gillard need to understand the plight of workers at the moment, and it's not a time for wage restraint - it's actually a time to get fair and decent outcomes."

Australian Workers Union national secretary Paul Howes expressed concern about executive pay but said unrealistic wage claims could damage employees. He called for greater collaboration in tackling inflation.

But both business and shareholders vigorously rejected the idea of cutting corporate profits and share dividends to cover big pay rises for workers.

Australian Chamber of Commerce and Industry acting chief executive Peter Anderson branded the bid unrealistic and said there were more creative ways to increase both wages and profits. But he warned against demands for large pay hikes. A spokeswoman for Ms Gillard declined to comment last night.