Nobel Prize winner endorses sector bargaining to boost wages

Nobel Prize-winning economist and former World Bank chief economist Professor Joseph Stiglitz has endorsed industry and sector bargaining as an answer to slow wages growth, in comments made ahead of his address to the National Press Club in Canberra yesterday.

Professor Stiglitz’s comments come as the Australian Bureau of Statistics (ABS) released its September quarter Wage Price Index, which saw headline wage growth increase by 2.3 per cent.

The ABS noted that much of the increase was attributable to rises in the minimum wage and award wages. However, the Australian Council of Trade Unions (ACTU) expressed its disappointment in the rise of “only one fifth of a percentage point from the June quarter’s figures” despite the increase in minimum and award wages.

ACTU President Michele O’Neil said “While we won a minimum wage increase for people on award wages, working people don’t have the tools they need to win fair pay rises above the minimum wage and in line with the rest of the economy. We need to fix our bargaining system so that working people can negotiate with real decision makers across industries and sectors to lock in fair pay rises and stop the race to the bottom on pay.”

Professor Stiglitz told The Australian that allowing sector wide or nation-wide bargaining would boost pay packets.

“The countries that have been most successful in preventing this deterioration of wages have been the countries that have more sectoral and national bargaining,’’ he said.

He told The Australian that the laws needed to be changed including laws which had undermined unionisation so that the collective action of workers to defend themselves against employers has been weakened.

The ACTU welcomed Professor Stiglitz’ comments, with Ms O’Neil saying “The ‘enterprise only’ bargaining (EBA) model is in crisis. There are 500,000 fewer workers covered by EBAs today than just three years ago.

“Working people need to be able to negotiate a fair deal with real decision-makers. This means being able to sit down and negotiate agreements across multiple employers, sectors or industries,” she said.