Unions Signal Big Push For Pay Rises

The Age

Friday January 25, 2008

Ben Schneiders, Workplace Reporter and Misha Schubert, Canberra with Michelle Grattan

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 under control, Deputy Prime Minister Julia Gillard yesterday backed Treasurer Wayne Swan's call for wage restraint - saying pay rises should be based only on productivity.

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

But Finance Minister Lindsay Tanner expressed some support for the union position, saying last night it was "highly desirable" that people's wages stayed up with inflation.

ACTU secretary Jeff Lawrence told The Age that employees were not the cause of rising inflation and that instead business needed to make cuts. "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 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 had risen 72% since 2001, a study last year by RiskMetrics found.

In a sign of the ACTU's position on this year's minimum wage claim, Mr Lawrence said wages growth must at least match the 2007 Consumer Price Index rise, 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 lost ground from rising living costs, and wage rises 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 hurt employees. He urged more collaboration in fighting inflation.

Business 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.

Amid the debate, Ms Gillard met in private with business and union bosses yesterday to discuss the Government's transitional industrial relations bill. The bill will abolish future Australian Workplace Agreements and allow those already in force to run until they expire.

Meanwhile, Mr Tanner has warned that Government spending is increasing at an unsustainable rate - more than 6% in real terms on some measures - and that big spending cuts must be made.

As the Government strives for a 2008-09 surplus equal to 1.5% of GDP, Mr Tanner confirmed that Family Tax Benefit part B would be subjected to a "generous" means test.

With the exception of election promises, he said "everything is going to be considered" in making cuts "right across government". -- With MICHELLE GRATTAN