Wage Rises A 'risk Rather Than Reality'

The Age

Friday May 9, 2008

Ben Schneiders, Workplace Reporter

TALK of a wages break-out is not borne out by the reality on the ground, despite all the lurid headlines.

In Victoria, the Construction, Forestry, Mining and Energy Union has been discussing a wages claim with employers and its peak body, the Master Builders Association of Victoria.

The CFMEU is not a shrinking violet, but it is believed what is of most concern to employers is not the size of the claim - which is likely to be about 5% a year over three years - but the arguments over flexibility in rostering and productivity.

In March, about 90,000 Coles and Bi-Lo staff Australia-wide voted on a hardly extravagant 10.4% increase over three years.

ANZ chief economist Saul Eslake sums up the overall wages picture this way: "I'd have to say, given how tight the labour market is, that it's remarkable how little upwards pressure there has been on wages."

The Bureau of Statistics' most recent labour price index for 2007 shows seasonally adjusted annual growth in wages of 4.2%, with private-sector growth slightly ahead of the public sector.

It had crept up in recent years, but a break-out was a "risk rather than reality", Mr Eslake said.

Much was made of the release on Wednesday of a 13-month-old Treasury minute - compiled before Labor's workplace policy was released - that warned of the threats to inflation and employment if WorkChoices was scrapped.

But Ken Phillips, from the free-market Institute of Public Affairs, writing earlier this week in The Australian Financial Review, said that the signals so far were that Labor's policy was not pro-union.

"Identical to WorkChoices, Forward with Fairness stops compulsory unionism, pattern bargaining, secondary boycotts and wildcat strikes, and puts rules around union right of entry," he wrote.

This week's teachers' deal in the Victorian public sector has, however, caused some alarm.

Some teachers will get rises of about 15% in the first year or 38% over 31/2 years. That followed generous deals with police and disability workers.

Mr Eslake said the fallout needed to be watched closely by other governments to prevent similar wage rises.

"Obviously, there is some risk that the Victorian settlement for teachers - which I think can be justified on its own terms - might be used as a benchmark either by other public-sector employees or by teachers in other parts of Australia."

Peter Anderson, chief executive of the Australian Chamber of Commerce and Industry, said he was concerned about wages but those concerns "should not be exaggerated".

ACTU president Sharan Burrow said talk of a wages blow-out was "just incredible hype".

The teachers' deal involved major productivity trade-offs and by paying more, the Government ensured that it could recruit teachers in a competitive market, she said.

The wage of a top classroom teacher rises from about $65,000 to $75,000 under the deal.

So far, Mr Eslake said, employers had remained disciplined in not matching the wages growth from the mining boom that had drawn workers to Western Australia.

Mr Eslake said the risk now was that with inflation above 4%, it would be built into future wage claims.

But the economy is still digesting the recent stiff interest rate medicine from the Reserve Bank.

The central bank will be hoping that the rate hikes will ease the pressure where it exists.