Treasury concedes IR changes will lead to lower wages

A Treasury document advising Peter Costello that wage rises for Australian working families are likely to be lower in the future under WorkChoices leaves the Federal Government`s arguments for workplace change in tatters, says the ACTU.

The report says John Howard’s Industrial Relations changes will mean ‘increases in minimum wages are likely to be lower’ and that this will ‘slow award wage growth and flow on’ to other workers.

‘These documents prove that the Howard Government has known all along that its Industrial Relations changes would lead to lower wage rises, cuts in the take-home pay of workers and more pressure on working families,’ said ACTU Secretary Greg Combet.

‘The Treasury has also confirmed that there is no economic case or justification for the Government’s new IR laws.’

The Treasury reports found:

  • Productivity is likely to be ‘suppressed’ by the Government’s plans to push down award wages
  • There is no evidence that the Government’s efforts to push more workers onto individual contracts will improve productivity because there is ‘no clear difference in productivity gains between collective and individual agreements’ and
  • Government claims that jobs growth will be boosted by IR changes are misleading because any employment gains would be ‘not huge in the context of recent history’.

The Treasury analysis is confirmed by independent commentators. Rory Robertson, an economist with Macquarie Bank, told the Sydney Morning Herald: ‘It’s pretty obvious that there will be downward pressure on the wages of the lowest paid members of the labour force.’