UC says strikers’ demand to tie pay to housing costs could have ‘overwhelming’ cost impacts
The Australian Council of Social Service is worried about the costs of the Fair Work Commission’s proposed changes to the Fair Work Act – including the idea of tying wage increases to the cost of housing.
But the organisation says those costs would likely outweigh the increases in worker pay that may come as a consequence of the changes.
Fair Work Australia’s Fair Work Review has proposed a series of new changes to the Fair Work Act, including a new cap on pay increases of 15 per cent per year.
The commission says the proposed changes could result in a “significant increase” in household debt and an increase in stress among workers.
But the Australian Council of Social Service is concerned about the changes would cost a lot of money, and that the increase in household debt may be significant.
Dr Susan Browne says the idea of paying workers more to avoid the impact of a wage freeze on their living standards is “not a workable or sustainable solution”.
“What you’re really talking about with a wage freeze is that workers would have to tighten their belts and in the long run you would be increasing inequality and you would be increasing the amount of time people spend unemployed.
“And so those are the things we need to think about when you start to think about wages,” she said.
“There’s a clear case for wage increases but we’re trying to ensure that the effect of those increases on household debt is relatively modest.”
Dr Browne says the only solution that can deliver lower inequality for Australian households is a change in the design of the economic system.
“The idea that you’re going to pay people to buy their own homes when the houses they live in, generally speaking, have a relatively low real return to the investment in those homes, is not a workable or sustainable solution,” she said.
“We know what the housing market is like in Australia so the amount of home ownership should be relatively high.
“But it can’t continue forever as if we’re talking about households as the basic building blocks of the economy.”
Dr Browne says the Australian Council