Academic journal article The Economic and Labour Relations Review : ELRR

The 1991 National Wage Case: An Industrial Relations Perspective

Academic journal article The Economic and Labour Relations Review : ELRR

The 1991 National Wage Case: An Industrial Relations Perspective

Article excerpt

1. Introduction

The National Wage decision promulgated on April 161991 has the capacity to continue the incremental devolution of National Wage decisions to the workplace. This devolution was initiated by the two-tiered decision of March 1989 and further developed by the Structural Efficiency decisions of August 1988 and 1989. The decision also has the capacity to usher in a major discontinuity in National Wage regulation. The capacity for discontinuity arises not so much from the decision itself, which was significant in its rejection (or at least postponing) of major elements of Accord VI as from Commonwealth and ACTU reaction. Action by these prominent parties will determine whether the managed decentralism will continue to provide for an orderly devolution to enterprise bargaining or whether a more sectional and less predictable approach will ensue. The latter will necessarily reduce the Commission's role and consign it to tendering to the less protected sections of the workforce. Such a discontinuity would add to others which have formed a part of the mosaic of National Wage determination since" the abandonment of automatic quarterly-cost-of-living adjustments in 1953. These major discontinuities are outlined in the next section of this paper. Subsequent sections outline the Accord Mark VI and the National Wage Case respectively.

2. National Wage Discontinuities

For the last 30 years National Wage detenmnation in Australia has been marked by major discontinuities. The discontinuities reflect a number of factors: the changing economic environment within which National Wage determination has been undertaken; political discontinuities and changes; the loss of authority and mystique on the part of the federal tribunal in the mid-1960s; the greater consolidation of union power within the ACTU which over the period has subsumed the two other peak union bodies; changes in protection and other regulatory policies; and the rise of a new generation of union leaders imbued with a Keynesian full-employment rather than depression-prone mentality.

In brief, the major contours of National Wage discontinuities can be summarised thus. In 1953, after more than thirty years of basic wage automatic quarterly cost-of-living adjustments, that system was abandoned. This change was in response to the Korean war which resulted in an inflation of Australian wool prices and, as a consequence, general prices.

The tribunal removed cost-of-living-adjustments on the grounds that they did not accurately measure the economy's capacity to pay wage increase. A system of wage reviews based upon seven economic indicators--employment, investment, production and productivity, overseas trade, overseas balance of payments, the competitive position of the secondary industry and retail trade indicators--was supposed to afford a better assessment of capacity to pay.

In 1956 the Commission moved to annual reviews of the basic wage based upon these indicators but in 1961 accepted the 'prices plus productivity' formula. The latter, a disguised form of indexation, reduced industrial unrest about a wages system which unions argued continued to be determined on a needs basis. The productivity element was, in essence, a surrogate for capacity to pay. Also in 1961 the Consume Price Index was accepted by the Commission as the appropriate index for national wage determination. Subject to minor adjustments (in particular its encompass ing of all State and Territory capital cities) it has remained as the longest serving price index used for wage determination in Australia.

The next major discontinuity was in 1967 when the Commission accepted employer arguments, made since 1960, for the abandonment of the bifurcated wages system consisting of the basic wage and secondary wages. The Total Wage was introduced. The Minimum Wage replaced the basic wage but was not a foundation wage. Thus, upward adjustments of the Minimum Wage do not result in all employees receiving wage increases. …

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