The Fair Work Commission recently awarded a $15.80 a week pay rise to 1.5 million of Australia's lowest paid workers. Unsurprisingly this award was rebuked by both the Australian Council of Trade Unions (ACTU) and the Australian Chamber of Commerce and Industry. They had been seeking an increase of $30 and $5.80 a week in pay respectively. The rhetoric that accompanied the Australian Fair Work Commission's award was expected:
'This decision is a kick in the guts for 1.5 million low-paid workers and their families that will only further widen the gap between the low-paid and average earnings," said Dave Oliver, ACTU Secretary.
'Well you certainly will see some job losses and some increased job insecurity. Most businesses will try and deal with this by reducing their working hours to try and maintain control over their wages bill, that's the first way in which businesses will have to try and deal with it,'said Peter Anderson, Chief Executive of the Australian Chamber of Commerce and Industry.
It has become common place in recent years for similar responses to be provided to the decisions of the Fair Work Commission; the unions ask for the one figure, the business groups another, and Fair Work Australia comes to a decision that falls somewhere in between.
Perhaps it is possible that both points of view are equally valid, or at least have some truth behind them; low paid workers are struggling to meet the demands of the cost of living, and business is struggling to meet the increased costs of wages that their employees demand, and deserve.
Let's face it, business and unions, employers and employees, capital and labour, however you want to label the debate, need each other. Yet too often they seem to be at loggerheads, as if their interests are diametrically opposed. The sooner both can realise that their success is mutually dependent, the energy that is wasted in these skirmishes may be put to other uses.
A new approach as to the determination of wages is but one method of resolving this dispute.
A new approach to determining wages must seek to meet the interests of both groups; fair wages, that promote and encourage successful business.
A new method for the determination of wages must reflect the mutual dependence of employers and employees. Employees need to be shown and need to feel that they are sharing in the success of their employers. Employers need to be seen to be sharing the success of their business with their employers. Employees need to show that they want to see their employers' businesses succeed, and employers want to see that their employees want their businesses to succeed.
Thus it is proposed that the wages of employees be linked to the wages of their employers. A reliable indicator of a business' success is the pay packet of the CEO or owner. If the business is doing well, this is usually reflected in the wages of the person at the top, be that with increased levels of remuneration or bonuses.
A business' success should not be limited to those at the top, but should be shared with all employees. Thus when the wages of those at the top rise, the wages of all others employed should likewise follow suit. It is obvious that controls will have to be in place to ensure that the need to increase the wages of others is not avoided. In doing so, it gives both employees and employers are more vivid stake in the business, a stake that is rather illusory in the current model.
Further, it should ensure that we avoid occurrences of the GFC's 'golden handshakes', which saw CEO wages increase, business bottom lines hollow out, and the lower paid workers left to endure the brunt of their businesses' losses.
If a business is not doing well, then the load must be shared by all proportionately.
When businesses are struggling, we cannot expect increased wages to be heeded. Employees, employers and the community want successful businesses. Employees and employers should be expected to work together, for their successes are mutually dependent.
Certain safe guards must be in place to reflect the varying sizes of business found across Australia. It would be useless for example to demand the wages between the CEO and lowest paid employee be fixed at a ratio of 75:1. In a small business this would leave some employees working for pittance.
Whilst it may be inadequate to provide a single ratio for determining workplace wages, it remains clear that we need a new model of determining wages in this country. A model that reflects the mutual dependency of employees and employers, a model that gives employees and employers an equal stake in the workplace, ultimately a model that provides for strong and successful business and fair and adequate wages, for we cannot have one, without the other.
Raffaele Piccolo is a student at the University of Adelaide. He holds an Honours Degree of Bachelor of International Studies and is currently studying towards his final year of a Bachelor of Laws. He has a keen interest in public policy and community development. In his spare time he is involved in many community organisations.