The Australians at Work report claims that AWAs reduce wages of unskilled workers and increase their working hours – in short that AWAs decrease their hourly wage rate. Common law contracts deliver a better deal the report claims. The system of AWAs is claimed to lead to what amounts to almost child abuse.
This is Laborite tripe and mythology. It is not the duty of the wage system to deliver social justice. The wage system should pay workers their worth in terms of production. With enough competition firms are forced to do this because workers will otherwise quit and accept bargains that benefit both employers and themselves elsewhere. This competition increases the more workers are employed – with higher unemployment, because wages are too high, it becomes harder for unemployed workers to get a job and harder for employed workers to shift out of a job they don’t like. If firms have to pay more than the opportunity cost of labour, perhaps because of trade union activity, then fewer workers will be employed. Minimally prescribed pay and conditions do simply create unemployment.
We need to once-and-for-all bury the myth that wages should be some kind of gift that employers pay workers. We should also teach young Australians about the value of competition as a means of ensuring workers are matched with well-paid jobs and as a means of reducing unemployment.
And there is effectively full employment in Australia at present – opportunities for getting jobs are everywhere. They may not be gold-plated jobs but everyone who wants to work can get a job.
Socially just wages should be paid but this is not a function of labour markets whose task is to efficiently allocate labour resources and to ensure no wasteful unemployment. The tax system can be configured to help low income workers and transfers can be provided to supplement the incomes of those on low incomes. This is the best way to achieve a just distribution of Australian incomes.
Coalition MPs such http://www.theage.com.au/news/national/awas-more-work-and-less-pay/2007/10/01/1191091031239.html by pointing out that the researchers are hacks for the union movement and that other studies suggest different outcomes. This is playing into the hands of Laborite dodos. The correct way of responding to their economically illiterate claims is to point out that you don’t try to force firms to employ low skilled workers on high wages that exceed their low productivity because you will only generate unemployment.
The correct response is to determine how much middle Australia will pay to ensure that everyone in the community gets a reasonable enough income and to make sure by the tax-transfer mechanism that this is achieved.