In a new publication, Solving the Crisis: Raising the Living standards of Australian workers, some of Australia’s leading progressive economists and social policy analysts explain why we have a crisis in living standards and how we can fix it. A progressive policy agenda for a second term Albanese Government is advanced.

Productivity might be the word on everyone’s lips in the lead up to the Albanese Government’s Economic Reform Roundtable  however weak productivity isn’t the cause of many of the problems experience by workers in Australia today nor is increasing productivity the solution. Rapid inflation after the pandemic, combined with rising interest rates and slow wage growth, left many Australian households struggling to afford necessities. The Reserve Bank’s (RBA) blunt strategy of raising interest rates to slow the economy post the pandemic both misdiagnosed the drivers of inflation and harmed Australian workers who struggled to manage increased mortgage repayments and other debts. The root causes of Australia’s post pandemic crisis—rising corporate profits, unjustifiable price hikes, and deep wage stagnation were ignored by the RBA.

Despite a reduction in inflation and interest rates, too many Australians are still experiencing lower living standards after the turbulent events of the past five years. Official inflation figures may capture broad economic trends however, they do not adequately describe the real pressures experienced by working people—particularly when it comes to the impact of the increasing costs of essentials like food, housing, and energy. Australian workers can ill afford another round of RBA driven unemployment, austerity, and uncertainty.

What will it take to repair the damage to Australian workers’ living standards?

The multidimensional policy agenda in Solving the Crisis calls for

• increases in real wages
• achieving full employment
• better quality jobs and greater assistance and respect for those seeking employment
• strengthening public services (including health care, childcare, aged care and education)
• making fair and affordable housing available
• developing a well-planned and supported transition to renewable energy sources.

The key to the success of this agenda is centring the experience of workers’ and their families.

Australia should adopt a progressive multidimensional economic agenda that lifts living standards, reduces inequality, and strengthens democracy, rather than a narrow concentration on productivity. Uniting people behind this progressive economic agenda helps counter the trend towards increasing inequality, division and conflict, that has been present in other countries.

How to solve the living standards crisis

Four policy papers are the core of  Solving the Crisis. These papers examine the main drivers of inequality and deteriorating living standards in Australia

• Greg Jericho examines how inflation is misunderstood when disconnected from wage growth. He proposes a shift in Reserve Bank policy and a renewed focus on promoting real wage increases.
• Peter Davidson  argues that growing inequality is not inevitable. Through strengthening the four key policy pillars - income support, minimum wages, full employment, and employment services - minimum incomes can be raised and inequality reduced.
• Thomas Greenwell highlights how decades of declining collective bargaining and high underemployment have undermined living standards. He calls for renewed support for unions, stronger collective bargaining systems, and a focus on full employment in macroeconomic policy.
• Charlie Joyce revisits the concept of the social wage—and argues that rebuilding and expanding the social wage can raise living standards, promote inclusion, and restore trust in democratic institutions.

Together these papers provide practical policy solutions forming a platform for economic reform.

Solving the Crisis helps working people to help cut through economic misinformation and political spin, offering a clear lens on the structural factors that have driven inequality and declining living standards.

Progress is happening

In its first term the Albanese Government has made cautious progress on living standards. This progress includes labour market reforms that have contributed to stronger wage growth. These reforms include supporting increases in the minimum wage, facilitating collective bargaining in hard-to-organise industries, funding support for wage increase in early childhood education and aged care. Cost-of-living measures, like energy rebates and expanded renter assistance, also provide important support to hard-hit households. Meanwhile, the easing of interest rates by the RBA—better late than never, may support future growth and job-creation.

However, while prices are growing more slowly, the levels of many prices remain too high—especially for necessities like food, housing, and energy. Wages growth may have commenced however at the current pace, it will take several years to repair real wages, and restore the same purchasing power for workers they enjoyed before the pandemic. The quality of public services (another critical determinant of living standards) has been damaged by underfunding and overreliance on privatised provision, the costs of which we are currently seeing in early childhood education and care. Minimum income payments such as Jobseeker remain woefully inadequate. The system designed to support and assist people from unemployment into decent jobs is broken beyond repair. Meanwhile, global economic and geopolitical uncertainty threatens to derail this modest recovery before it really gets going.

More work to be done

At the 2025 federal election the Australian people rejected political parties proposing cuts to public services, short-term fixes (like petrol tax cuts), and the politics of division. In its second term the Albanese Government has a unique opportunity to implement progressive policy changes such as those contained in Solving the Crisis.

Read the full publication Solving the Crisis here.

More details about Solving the Crisis and additional resources are available at https://www.carmichaelcentre.org.au/living_standards.

Laurie Carmichael and Dick Scott raise the questions to be discussed among members about the forthcoming 1974 wages and conditions campaign, using the pages of the AMWU’s monthly journal.

This is the end of the second full year of the Whitlam Labor government and, of course, after the defeat of the penal powers in 1969. The new Labor government soon inherited a global recession through no fault of their own.

The unions had to work out how to make wage and other gains in the context of a recession and a Labor government more on the defensive because of that.

Note the use of questions to build membership involvement from below.

In this Laurie Carmichael joins with other union leaders in a 1966 seminar organised by the ACTU to discuss automation.

This excerpt from Laurie emphasises the impact of automation on wages and wage relativities, wages policy and bargaining.

This may well be one of the first of such discussions among Australian unions.

Automation and the Unions

Australian Left Review, December 1966-January 1967

WITH the further development of automated techniques in Australia, the trend away from the concrete concepts of the basic wage and margins in arbitration will further increase. The total wage concept now adopted in principle, with its less tangible and more abstract concepts of “economic content” and “work value” will be carried further, compounding the already difficult processes of substantiating argument in the arbitration system.

This will aggravate the growing difficulties of arbitrationists within the trade union movement. The extreme right will base themselves upon the amorphous concepts as a means of more and more trying to head off into a dead end the workers’ complaints which will arise from the effects of automation. On the other hand, there will be an increasing section of the traditional reformists concerned with the lack of concrete procedures.

From the point of view of an alternative to this development in the form of mass campaigning, the needs concept (perhaps a better term should be. found for it) plus a margin for skill (and perhaps a different term for this too) would still have the most attractive force. The needs concept, however, would certainly have to be associated with modern needs, in particular the capacity to absorb the great wealth of goods that can be produced and distributed. The difficulty with the word “needs” is that it carries a connotation of existence levels only, rather than the high standard of living possible from the great quantity of goods wnich can be produced from automated industry.

Problems arise in regard to wage claims of a general nature where automation penetrates only some industries at the one time. For example the relatively high degree of mechanisation at General Motors produces fantastic profits for that company and large scale redundancy for the workers in the industry. But the general wages approach of the whole trade union movement at the present time fits in with the arbitration concept that the productivity of a highly mechanised industry is taken into account in a general claim, and that “efficient” industries are tree to enjoy all the fruits of their automated processes.

Despite the impact of automation in the particular industries into which it is introduced, it does not penetrate all industries simultaneously, and wages problems associated with spasmodic introduction will occur over a protracted period. Even in the United States only a relatively small proportion of industry is yet automated.

If one thinks of autom ation as being fully introduced, it is possible to think of a wages policy which on a nation wide scale can take the whole situation into account. Where the whole of industry and commercial activity is not automated, special claims and special problems arise in those sections where it is introduced, because an overall wages policy does not apply. This is where the special claims arise, such as a three months term ination allowance after 12 months employment, special payments available for people made redundant in industries whilst being retrained for others, etc.

A great deal more effort must be made to argue out the ideological problems of a mass wages policy with the onset of automation, as an alternative to the deliberately adopted “abstract” policies of arbitration.

A point regarding change of skills. Differences in skills for the performance of work will have to continue to be recognised, but a stronger stand should be taken with regard to the allegedly super skills which are often elevated to managerial and similar levels and so “bought off.” There should be more striving for a higher common content and lower differentials as the possibility of higher living standards for all increases.

Read the full interview.

Extra commentary and links

This short contribution is pregnant with profound and unique insights prescient for our modern times with the advance of what is called “artificial intelligence”.

Laurie Carmichael alerts the activists of those days to the interactive relationship between automation technology and wage setting and other content in industrial awards.

Those times were marked by significant disagreement and conflict within the union movement, including the tension between specialist arbitrationists and “mass campaigning” leaders.

“Mass campaigning” was built by nurturing shop floor mindful militancy. The intent was to build the “mass” workplace by workplace to a point where its influence and demands could overwhelm the claims of the employers for a wage cut or moderation.

In those times the “mass campaigners” were very influential, while very good at arbitration when it was required. The “arbitrationists” either opposed or placidly went along with “mass campaigning”.

The use of the “penal powers” to prevent “mass campaigning”, set up in the Conciliation and Arbitration government by the Menzies governments and then applied by the Conciliation and Arbitration Commission, required a campaign that would defeat them. Under Carmichael’s guidance, the membership of most unions combined in national strikes to defeat the penal powers in 1968. 

Note Carmichael’s challenge to the “needs” concept in setting wages. Compare that to the AMWU claim to the current 2024-5 Annual Wage Review that is based on the advanced “health and well-being of workers”.

For more depth on wages concepts as they had developed at that time, and the tension between “arbitrationism” and “mindful militancy”, readers should go to the AEU publication “Six Wage Concepts”, by its National Research Officer, Jack Hutson.

The last paragraph points to what emerged in the mid to late 1980’s as “award restructuring”.

• Don Sutherland

Link

https://www.fwc.gov.au/documents/sites/wage-reviews/2024-25/c2025-1%20-%20amwu%20initial%20submission%20to%20awr%20-%204%20april%202025.pdf

https://catalogue.nla.gov.au/catalog/401320

In this short memoir Tony Evans reflects on Laurie Carmichael and Jim Baird. Baird and Carmichael worked closely and with other officials of the union to develop the research and bargaining strategy that would be presented to members. The research usually included information collected from shop steward meetings and surveys.

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Tony Evans is a veteran union activist, now retired, and a South Australian. Tony was (is) a multi-union and multi-industry union "mindful militant". Laurie Carmichael pushed him into union roles that involved "active research". He wanted to and was required to work with union delegates and members to produce information that could be used in consultations and confrontations with governments and employers about jobs in the manufacturing industry.