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Cut profits, not wages

Don’t you just love it? Rich men telling poor people what’s good for them.

In Australia the Orwellian Fair Pay Commission has frozen the minimum wage and effectively cut the real wages of the 1.3 million lowest paid workers.

The Australian Council of Trade Unions estimates that this is an award wages cut of about $16 per week, and wipes out the Rudd Government’s stimulus package of $900 almost completely.

The Fair Pay Commission has cut real wages to supposedly save jobs. It won’t.

At best it might delay by a few months some sackings.

And what hypocrisy. Can you really imagine the big bosses as caring sharing employers whose only interest is jobs?  Give me a break.

These are the same bastards who are cutting tens of thousands of jobs already and who are preparing to sack hundreds of thousands in the name of profit. 

It’s their crisis. Make them pay.

The crisis of profitability in Australia and globally will see unemployment here, on the Government’s own figures, reach 8.5 per cent next years from its present level of 5.7 percent.

That’s one million unemployed workers.  If we take into account workers who want to work more hours then the real level of unemployment will soon be over 15 percent.

Cutting wages might bolster profits in some industries. But there is no guarantee that this tiny bit of extra profit will go to keeping jobs. 

It could for example go into new machinery, or dividends, or paying off debt or taking over a competitor on the cheap.

None of these is job creating in the short term.

Indeed freezing wages may tip others into receivership as aggregate demand declines further.

In 1931 the Arbitration Commission cut wages by ten percent.  Unemployment went up. 

Deputy Prime Minister Julia Gillard has attacked the decision.  She would, wouldn’t she?

If they were serious the new Keynesians in the Labor Government would introduce legislation into Parliament increasing the minimum wage from its current $543 a week to say $580 as an interim measure, with real wage increases of ten percent a year.

This would force a cut to profits. If we are all in this together then that is completely acceptable.

Rudd Labor won’t do anything to improve the wages of the low paid because they accept (as Gillard and Rudd have both said) that one person’s wage increase is another person’s job. This is code for putting profit before people.

So the decision fits perfectly into Rudd Labor’s thinking.

Rudd and Gillard will huff and puff for a while and then go about the job of undermining unions which are pushing for real wage increases.

The minimum wage decision gives them the ammunition to do that.

As an aside that’s why the Australian Building and Construction Commission  exists – to smash those unions which could lead a real wages fight.

Rudd Labor could borrow more money and pay another stimulus package to the low paid to make up for what has been lost. They won’t because secretly they welcome the decision.

Remember, Rudd and Gillard are the Labor people who from 1 July this year have given tax cuts of more than $41 a week to the bosses, and less than $3 a week to those on the minimum wage.  That shows starkly where the ALP’s priorities lie.

The ACTU could mount an industrial campaign for real wage increases for all with no job losses.  They won’t because they too accept the wage slave system.

They have already said they will mount a catch up at next year’s hearings. Too late. That doesn’t feed the kids now.

And it gives confidence to employers and their allies all across the country that they can freeze wages of all workers with no action from the ACTU.

The trade union movement needs real leadership. The Lords of the Cinque Ports who currently run the union movement are battling with their barques in the bath. 

There may be a problem in this decision for capital. 

It doesn’t go far enough to restore profit rates to something that will save the system from long term decline.  Only deeper cuts to wages, coupled with lengthening the working day and acquiring competitors on the  heap, might be able to do that.

But such an attack could provoke a political and industrial backlash. 

Of course, fear is not necessarily an organiser for militant trade unionism.  It could have the opposite effect – producing a reluctance to take any action. 

There is another problem for the bourgeoisie. 

This cut has been painted as being about saving jobs.  When it doesn’t, some workers might begin to think they’ve kept their side of the bargain but the bosses haven’t. 

They could begin to understand that wage cuts are about saving profits, not people. Workers might realise that we are not all in this together.

That could lead to industrial action.

The ACTU and Labor Party strategies of neoliberal Keynesianism and  trade unionism have failed.

The reality for the working class is that to defend jobs and living standards they will have to strike, despite the opposition of Rudd Labor and the ACTU.

 As the Building Labourers’ Federation used to say, if you don’t fight you lose.

 John predicted this outcome in March in his article The bosses’ wage terrorism begins.

Tristan Ewins also has an article on this on his blog, Left Focus.  It’s called ‘Wages decision a “kick in the guts” for the most vulnerable workers’.



Comment from Tristan Ewins
Time July 9, 2009 at 5:42 pm

‘Final act of bastardry on wages’

At Left Focus we’re discussing the minimum wages decision by the so-called ‘Fair Pay Commission’ in its ‘final act of bastardry’. Please feel free to comment and contribute to the debate at:

We also have the details for “Servant of the Revolution” a play exploring the relationship between Karl Marx and Helene Demuth. (sounds interesting)


Tristan Ewins

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