This article is more than 2 years old

This article is more than 2 years old

More than half of major employers would like to freeze employees’ wages or offer below-inflation pay rises that are a cut in real terms, according to a new survey by a leading industrial relations law firm.

The Herbert Smith Freehills bargaining survey found that 60% of employers want to grant workers only nominal wage increases or to freeze wages, and many more are looking to cut other conditions from workplace agreements.

The survey also found widespread dissatisfaction with the Fair Work Act and the enterprise bargaining process among its 60 key clients, which include large companies across the construction, infrastructure, mining, retail and healthcare sectors.

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The survey will give further ammunition to the union movement, which wants legal changes to increase its bargaining power and has been arguing that big business cannot be trusted to pass on the Turnbull government’s proposed company tax cut.

Wages in Australia have stagnated. Figures released in August show that in the past year wages grew by a record low of 1.9%.

In February the governor of the Reserve Bank of Australia, Philip Lowe, called on businesses to lift wages to “boost household incomes and create a stronger sense of shared prosperity”.



On Wednesday Lowe told a business gathering in Perth that Australia’s painful run of record low wages growth may have finally troughed “with a pick-up evident in the most recent quarter”.

He said: “A further lift is expected but it is likely to be only gradual.”

On Sunday the secretary of the Australian Council of Trade Unions, Sally McManus, told the ABC’s Insiders program that over the past 10 years productivity had increased twice as fast as wages so something was “clearly wrong” with the industrial relations system.

Asked about Lowe’s comments, McManus said: “We haven’t seen that change yet and, if there is a change, it must be a very slight one. We are not seeing that in bargaining, nor on the ground.”

The Herbert Smith Freehills survey found 93% of companies wanted to remove some “unproductive or inflexible” conditions in their next round of bargaining, with 20% of those seeking significant change.



Dissatisfaction with the Fair Work Act was evident. Just 34% of employers said the bargaining process struck a fair balance between the rights of employers and unions – and only 26% said it allowed their organisation to improve productivity.

But arbitration by the Fair Work Commission was also unpopular. Only 11% said it was preferable to enterprise bargaining.

Labor employment spokesman Brendan O’Connor said the results “confirm Labor’s concerns of ongoing stagnant wages growth”.

The ACTU is campaigning to expand collective bargaining to allow unions to call strikes in support of uniform conditions across an industry, as opposed to the current rules that force them to bargain workplace by workplace.

Employer groups want the pendulum to swing in the other direction. The Minerals Council of Australia is calling for a reduction in unions’ powers to strike over the content of workplace agreements and the reintroduction of individual workplace contracts for high-income earners.

On Monday the Australian Financial Review reported that the Australian Mines and Metals Association wants to abolish the award safety net, which sets conditions for 2.3m workers and provides a floor below which conditions of collective agreements cannot fall.

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In response, McManus accused the mining lobby of being “ideological warriors for trickle-down economics who want to boost their profits the expense of working people”.

Such extensive changes to the Fair Work Act would likely prove impossible for the Turnbull government, which has been accused of lacking a mandate for significant reform.

Malcolm Turnbull and the treasurer, Scott Morrison, have argued that cutting the company tax rate from 30% to 25% for companies earning more than $50m a year at a cost of $30bn over 10 years would increase investment, demand for labour and wages.

But the ACTU and the progressive thinktank the Australia Institute have disputed that company tax cuts will go towards wage rises. The Treasury secretary, John Fraser, has said the entire $65bn company tax cut package would boost wages by just $750 over time.