Wages Policy in an Era of Deepening Wage Inequality Chris Briggs, John Buchanan and Ian Watson This is the fourth in a series of Policy Papers, commissioned by the Academy, to encourage public debate on issues of national concern. Occasional Paper 1/2006 Policy Paper # 4 The Academy of the Social Sciences in Australia Canberra 2006 © The Academy of the Social Sciences in Australia 2006 ISSN 1323-7136 Requests and enquiries concerning reproduction rights should be addressed to the Academy of the Social Sciences in Australia, GPO Box 1956, Canberra 2601. Tel 02 6249 1788; Fax 02 6247 4335; Email
[email protected]. The Academy is not responsible, as a body, for the opinions expressed in any of its publications. All articles appearing in the Occasional Paper Policy Series are peer reviewed. Contents 1 Introduction 1 1.1 The dilemmas 2 1.2 Why policy matters 6 2 Bargaining sector 8 2.1 Centralised or decentralised? the old mindset 9 2.2 Genuine choice? Enterprise bargaining vs coordinated flexibility 11 3 Non-bargaining sector 16 3.1 The ‘low wage sector’ strategy 16 3.2 The ‘living wage’ strategy 18 4 Commercial sector 21 4.1 Employees and contractors 21 4.2 Labour law and commercial law 22 4.3 The incursion of trade practices law 24 4.4 Implications for wages policy 25 5 Work and welfare 26 5.1 A wage earner’s welfare state 26 5.2 The failure of employment policy 27 5.3 Welfare to work and wages policy 29 6 Where next? 33 6.1 Old problems, new approaches 33 6.2 New priorities 34 6.3 Conclusion 38 List of Figures 1.1 Fragmentation in the setting of wages 3 1.2 A workplace perspective on different forms of employment 4 1.3 Changes in median earnings by deciles, Australia, 1989 to 2001 5 List of Tables 1.1 The spread of enterprise agreements 1989, 1992, 1994, 1995, 2000, 2002, 2004 7 3.1 Incidence of low-paid employment by occupation, age and sex (%) 16 3.2 Wages growth of low paid workers, 1989–1999 (%) 20 Acknowledgements The authors would like to thank the Academy of the Social Sciences in Australia for their generous support in producing this paper.