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Workers’ wages on a slippery slide as foreign investors take profits overseas

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Ned K.

The daily news cycle of the giant media corporations has attacked the construction workers for winning 5% wage increases each year for the next 4 years in new Enterprise Agreements.

They use these wins to give the impression that that any group of workers who significantly increase their incomes through struggle are "against the national interest" or placing jobs in jeopardy.

What is actually happening though is that the income of workers as a whole is on a downhill slide and arguably has been this way over the last 40 years, including for construction workers as a whole.

Last week the Reserve Bank released a report by economist James Bishop which concluded that there is currently a "reduction in size and frequency of pay rises" and "historically-low growth in wage rates."

The decline in the average size of wage increases since 2012 has been greater than during the imperialist financial crisis of 2008.
Bishop says the average size of "wage changes" has dropped from 3.6% in 2012 to 2.3% in the year ending June 2016. The share of 4%-plus wage increases fell from 29% in 2012 to just 7% in 2016.

Frequency of wage increases for all workers has dropped to a 16 year low and the average length of time between wage increases has risen from once every four quarters in 2012 to once every 4.75 quarters in 2016.

These overall figures include both public and private sectors. In the private sector the situation is worse with the growth in rates of pay excluding bonuses now firmly below 2% per year for the first time since the ABS began compiling the Wage Price Index over twenty years ago.

In the year ending June 2016, wages in the private sector grew by just 1.9%. This was a year in which workers on the minimum award rate had a wage increase of 2.4%. So wage increases in collective agreements have been on average lower than even the safety net award increase for the year ending June 2016.

Looking at even longer term trends, ABS data shows that since the mid-1960s to the present day, the gap between the median average wage and the minimum wage in Australia has widened.

In the 1960s the minimum wage was 60% of the median wage. Now it is about 40% of the median wage! 

This gap between the haves and have nots within the working class was accelerated from the 1990s with the introduction of the ALP federal government approved Enterprise Bargaining system.

Prior to that system being introduced in about 1993, the pay levels in awards of semi-skilled workers in all industries were equivalent to a percentage of the Metal Trades rate. For example a cleaner's rate of pay was struck at 87.4 % of the Trade rate. 

Since 1993 the Trade rate in construction, mining and manufacturing increased through workers winning wage increases through enterprise agreements so that today the average Metal Trades rate is $28 per hour or more. However the minimum wage now is about $18 per hour or 60% of the Trade rate instead of the 87.4 % of the Trade rate in the case of a cleaner in 1993.

Wages down –profits up

These short and long term trends in wage movements are contrasted with an increase in profits as a share of GDP. It cannot be otherwise. Workers produce the wealth and value in all sectors of the economy. That wealth either goes to workers directly in the form of wages or to the capitalists as profit in one form or another with what's left going to the state as tax for the government to administer the affairs of the capitalists as a whole.

Within the capitalist class in Australia, imperialist investment and return on investment plays a dominant role. The Australian newspaper printed figures from DEFAT recently showing that US investment in Australia was $860 billion, almost double its nearest rivals from the UK and Japan followed by Singapore and Belgium. In the last year US investment in Australia at $55 billion was still the dominant investment from countries in Australia. The corporations from the US and other countries invest for primarily one reason - to take profit back to their headquarters.

So, given the continued large scale investment by multinational corporations in Australia and the steady decline of income of workers in Australia, is this investment and the control over industry and governments that come with it, in the interests of workers? 

Why the decline in real wages?

There are many reasons given by the mainstream media, politicians and economists for the decline in wages. Terms such as "globalisation", "international competitiveness" and  "low inflation" are given. However it is no accident that it is in areas of the economy where workers are strong and united, such as the large construction sites, state public sectors, maritime industry and manufacturing, that workers have been able to withstand the attack on wages and conditions by the capitalist class as a whole.

During the period from the 1960s to now there is another very significant percentage figure that has declined - union membership as a percentage of the workforce. From a high of plus 60% of the workers in Australia having a collective union voice to about 11% (private sector) now tells the story. 

While minimum wages are usually sufficient to enable the worker to crawl back to work the next day having paid the bills and enough to eat to slave for the boss for another day, the actual share of wages/profits is determined by the outcome of the on-going class struggle.

Imperialism in Australia, led by the US, mounted a sustained attack on the living standards of Australian workers during the period from the mid-1960s to the present day. They have been helped in their endeavours to shackle the workers by one government after another and by the top of the official trade union leadership who swallowed hook line and sinker the imperialist plans to "restructure" Australia and divide the working class through one measure after another - from ending closed shops to enterprise bargaining to labour hire and so on.

Where has all this got workers? ABS statistics show that if you count workers on ABNs, casuals, part time contract workers, fixed term contract workers across both blue and white collar jobs, that there is a staggering 40% of the total workforce that can be classified "precariously employed".

This trend is worsening every day as too many union leaderships put scarce organising resources in to the shrinking areas of what they see as their core membership rather than the challenge of organising where it most needed.

At the moment there is a disconnect between millions of workers and unions at a time when unions as organisations are under attack as registered associations under the restrictive Fair Work laws and trade practices legislation which impose heavy fines and even loss of homes on workers who take collective action in their own interests or in support of others such as CUB maintenance workers in Melbourne. 

There is also opportunity for union leaders to take a risk and show leadership and plan collective actions which assist workers to break through the shackles imposed on them by imperialism. Rather than telling workers all the time what they cannot do because of this or that law. 

As P.B Shelley, the British poet said of the working people, "we are many, they are few".


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