Wages too low to alleviate childhood poverty

Australia has made little progress in recent decades to alleviate childhood poverty, according to Australian Catholic Council of Employment chair Brian Lawrence. 

Speaking at an Anti-Poverty Week event sponsored by Catholic Social Services Victoria in October, Mr Lawrence said wages for many people were too low to lift children out of poverty (measured as 60 percent of the median income poverty line).

Mr Lawrence has drafted submissions and appeared at national annual wage reviews since 2003 on behalf of the Australian Catholic Council for Employment Relations (ACCER), an agency of the Catholic Bishops Conference.

Mr Lawrence quoted the Fair Work Commission (FWC) decision of June 2017 that Australia had ‘a legacy of relatively high inequality in earnings and in household disposable income, and disturbing levels of poverty especially among families with children’.

In its March 2018 submission, ACCER pointed out that the FWC for two decades or so failed to adjust minimum wage rates to reflect rising community-wide incomes. The FWC knew that the government’s strategy was to reduce financial support for families, not to increase it, resulting in a stand-off between the government and FWC, despite its statutory obligations to set fair safety net wages.

ACCER argued for an increase in the minimum wage by $32 a week up to the C10 wage rate (for trade-qualified workers, then $809.10 per week). It sought a further increase in the National Minimum Wage (NMW) of $8.10 per week, to progressively move the NMW to the lowest minimum wage for cleaners, currently $768.10 per week, which is $48.90 per week more than the NMW of $719.20 per week.

Instead of granting significant wage increases for the lowest paid, the FWC in June 2018 awarded a uniform 3.5 per cent increase to all minimum wage rates, consistent with its decisions since 2011. Mr Lawrence commented that maintaining ‘existing award relativities will always trump the interests of the low paid. When confronted by poverty in working families, the FWC effectively resorts to the view that the wages it sets need only be sufficient for the single person’.

Mr Lawrence pointed to recent research by UnitingCare and the Australian Council of Social Service on the extent of child poverty, that one child in six aged 0-14 years was living in poverty. All Australians shared responsibility for this. Mr Lawrence said that the Catholic Church also, with about 220,000 employees, should be advocating much more vigorously about the extent of child poverty and exposing the reasons for it.

‘If the general public knew that the FWC was putting wage relativities ahead of support for the working poor, which means preferring higher paid employees over lower paid employees, there would be profound discontent and, I expect, a change. The Church’s social justice groups, for example, could take this up as a campaign. We haven’t done enough.’

Mr Lawrence said that even the Australian Council of Trade Unions has passively accepted the single person criterion for wage setting. ‘The ACTU seems incapable of formulating a wages policy that addresses family living standards.’ The loss of relativity to median wages over two decades has cost NMW-dependent workers more than $50 a week.

While the FWC maintains the primacy of wage relativities, the lowest paid will fall further behind, with single income parents unable to lift their children out of poverty.

This article first appeared as ‘Why are hundreds of thousands of Australian children struggling in poverty, even with a parent working full-time?’ in Social Policy Connections, 1 November. It is reprinted with permission.