Wage increases do not cause inflation!

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For months, the Rudd government has been repeating the same economic message: the

“inflation genie,” it tells us is, “out of the bottle” and so a “wages breakout” must be

avoided at all costs to stem inflation. But this argument is bogus.

Demands that wages be held down, coupled with pressure on the Fair Pay Commission to

rein in minimum wages, are nothing more than a greedy attempt to serve an even bigger

piece of the economic pie to profits. Under the Howard government, the wages share

of national income continued to fall. This was expected, given that the central goal of

WorkChoices was to redistribute income from wage and salary earners to profits.

The figures are stark. In 1999-2000, the share of national income going to workers was

70.3%, leaving the share going to capital at 29.7%. Six years later, the wages share had

fallen to 66%, while the profits share had increased to 34%.

To sweeten its demands on workers to tighten our belts, the Rudd government makes

token appeals to business executives to “show restraint.” But the big end of town refuses

to oblige. Business is booming and executive pay has skyrocketed. While workers are

told a cut in real wages is essential, Allan Moss, the retiring CEO of Macquarie Bank,

walks away with a cool $80 million!

The government presents a deceptively simple formula. Wage restraint by workers will

reduce inflationary pressures, keep down inflation and interest rates and everyone will

benefit. Bingo!

It is true that high inflation is a problem. It erodes real wages and it has a particularly

harsh impact on those, like retirees, attempting to live on a fixed income. But it is not a

larger share of the economic pie going to workers that causes inflation. Inflation occurs

when the amount of money in circulation increases out of proportion to the amount

of goods that are available. It is often described as too much money chasing too few

goods. In an inflationary period, rising prices continue to outstrip any increases in wages,

and inflation persists even when real wages fall. Rather than wages, it is uncontrolled

consumer spending on credit and government deficit spending — especially on the

military — that drives inflation through the roof. This borrowing effectively puts much

more money in circulation than there is actual wealth to back it up. Other inflationary

pressures include world food shortages and high oil prices.

Sharan Burrow, the President of the ACTU, insists that the union movement can’t

accept wage cuts and must maintain real wages. But Australian workers have been going

backwards too long for us to accept maintenance of the status quo as our goal! In an

economic period when unemployment remains low and bosses are complaining about a

skills shortage, it is time for workers to win a bigger slice of the pie. We are the ones who

create the wealth, and we deserve it.

Firing up for 26 weeks paid maternity leave

Members of the Community and Public Sector Union (CPSU) have responded favourably

to a decision by the union’s Governing Council (GC) last March to launch a campaign

to win 26 weeks paid maternity leave over the next five years. The union’s blog was

swamped with comments from members who support the move. The campaign, designed

to win improvements rather than simply defend the status quo, is a popular topic of

tearoom conversation.

Union member, Julie, wrote: “The community can often underestimate the cost of having

a baby. I have been on 14 weeks maternity leave and four months unpaid leave. I lost at

least $12,000 in wages during my unpaid leave. Why should women have to bear such a

financial burden in having a baby?” KD wrote: “It works in other countries, so why not

here? It infuriates me when people say having children is a lifestyle choice. Don’t forget,

for those nearing retirement, without these new additions to the population, there will

be no workers in 16 years to pay taxes and fund your pensions and healthcare. The cost

of living these days is such that a family suffers at the loss of one income, and the high

costs of childcare eats into your pay when you do go back to work.” Shaz agrees: “I’ve

just returned from maternity leave and wonder how third-world countries could offer six

months and not us.”

Members clearly recognise that women’s reproductive rights are top-notch industrial

issues. The GC motion reflects the concerns of rank-and-file members. It notes, “while

there have been massive changes in society and work over the last 35 years, paid

maternity leave entitlements in the public sector have remained virtually unchanged.”

The government responded to the CPSU decision by arguing that six months leave was

“unlikely to be affordable.” This stance is not surprising. Despite making sympathetic

noises, the ALP actually removed support for paid maternity leave from its platform last

year. The ACTU also undercut the campaign by stating that it sees the CPSU’s claim as

a “reasonable ambit claim.” The GC motion does not present the demand for 26 weeks as

an ambit claim, but as something to be achieved.

The ACTU recently dumped its previous policy in support of 26 weeks paid maternity

leave. In a submission to the Productivity Commission Inquiry into paid maternity leave,

the ACTU claimed that 26 weeks paid leave is “unaffordable.” The ACTU and peak

business groups are united in their call for a government-funded scheme to be paid over a

12 – 14 week period at the rate of the minimum wage. The bosses, of course, would love

a scheme where they don’t have to pay. But CPSU women have found that 12 – 14 weeks

leave is inadequate.

For CPSU members like Julie and Shaz, winning the campaign for 26 weeks paid leave is

vital. There’s been virtually no change to paid maternity leave entitlements in the public

services over the last 30 years. Most permanent workers in the Federal Public Services

currently get 12 weeks paid maternity leave, while workers in some agencies have won

an increase to 14 weeks in recent enterprise bargaining rounds. Those employed on a

temporary basis or who are in their first 12 months of employment are not eligible for any

paid maternity leave.

The GC motion — which includes clear milestones — is a great start. It also commits

to “engaging with members” to “achieve this target.” CPSU members are ready to

mobilise. Needed now is the formation of democratically run, cross-agency campaign

committees in every major centre. These committees should campaign both to win 26

weeks paid leave for public servants and support a fight for a national employer-funded

paid maternity leave scheme for all Australian working women, including the two-thirds

who currently have none.

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