Wages under WorkChoices

One of the arguments I have heard is that WorkChoices led to a relative decline in wages in some industries (specifically hospitality) while mining, for example, used WorkChoices to increase productivity.

Sinclair Davidson, 25 February

Source: ABS Labour Price Index.

The labour price index shows wage changes for people performing the same work. It shows that wage increases in hospitality (or accommodation and food services, the nearest LPI category) were indeed low in the year after WorkChoices (which started in March 2006) compared to all industries and particularly mining. Accommodation and food services has a history of low increases and the post-WorkChoices year was not the worst for workers. However the fact that it was well below average for 2006-07 is consistent with WorkChoices having an effect.

10 thoughts on “Wages under WorkChoices

  1. I don’t think your graph shows anything much except that there was a huge mining boom that peaked just before the GFC (remember the stories about the tradies who got paid gazillions to go and work in the Pilbara).

    And the economy was generally very strong too, so all industries wages grew fast (remember unemployment was down 4%).

    Hospitality wages grew around 3% over the whole period. I suppose you could say that Work Choices stopped them going up by more, but then their growth didn’t go up, from 2001-2006, pre Work Choices, when other wages were accelerating. It’s the nature of the industry. You’ve got tens of hundreds of thousands of students looking for part time work in this industry and this keeps wages down.


  2. And? Am I missing something here, cause I don’t see the point of this post. SOR sums it pretty good I think.

    I would say this though. Hospitatility workers are likely to be getting some top up from welfare. And those top ups increased of over the mid to late naughties. In fact, they’re not really top ups, more like an alternative lifestyle really, being funded by mates – regular Joes.
    So they can’t complain too much. And if they do, well I would say ‘study hard, save up or start or your own business, but save your whining, cause the hand aint listening!’


  3. S of R – In the 8 years up to WorkChoices, accommodation and food services averaged annual wage increases 0.84% below the trend. In the two years after, the industry was 1.4% below the trend. That’s consistent with reports of AWAs being used to wind back penalty rates in an industry where work outside of normal hours is common.

    I don’t have any problem with this; penalty rates are often an anachronism of the days of 9 to 5 male workers with a wife at home to prepare meals and do the shopping. This was an unpopular but in my view justifiable outcome of WorkChoices.


  4. Other things were going on from 2006, such as the surge of foreign students, who worked in 7-11s and the like. And there was a similar surge of foreign hospitality students who graduated, were allowed to stay as migrants, and worked in the industry. Few of these would have been unionised. it might have been WorkChoices wot done it, but there are other possible explanations.


  5. Hospitality wages may have not increased as much as miners due to poor service. I mean, you go to a resturant, hungry jacks etc, and the service is not really good. I think its also getting worse. At least this is the case in the emerald city.

    On the other hand, the quality of ore dug up by the miners has been pretty good. Well, i mean at least it hasnt fallen.
    Hence, with falling hospitality service and good quality ore, is it any wonder that waitor wages have relatively slipped. WEll some food for thought.


  6. Interesting Sam!
    You get what you pay for, when you buy fast food you don’t expect five star restaurant service, just speed and basic civility will do.
    The angst about Workchoices should have finished months before the election when it was settled that no agreement was allowed to make a worker worse off. So the unions spent 20Mil or so to win office on the basis of fraudulent claims.
    It helps to understand that good employers want to have a productive workforce and they are prepared to pay for productivity, thereby delivering win win outcomes. The trade unions have never got hold of that idea because some of them found they could do better using the violence and the threat of violence of the “strike threat system”.


  7. Miranda Devine has prepared an interesting article in today’s smh on IR, islam and immigration. The article was a little light on the IR part, but definitly worth a read.


  8. If indeed it is true that there has been a rapid socio-ethnic change in the hospitality workforce in favor of [exploited] foreign students from NESB, then an obvious question is:

    To what extent did this reduce the value that customers assessed they received from the products/service, thus putting downward pressure on prices, which feeds back into downward pressure on wages?

    Low quality labour inputs is bound to reduce the quality of service/produced sold.


  9. I would have thought WorkChoices was more about increasing employment than wages. More people off the welfare line into entry level work (which hospitality usually is) will bring down the average pay anyway.


  10. “More people off the welfare line into entry level work (which hospitality usually is) will bring down the average pay anyway.

    Yes, but that won’t affect the labour price index which is meant to avoid this problem by comparing equivalent jobs over time.


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