Wages, profits and war (part 1)

The Annual Wage Review (AWR), well underway, is one of three major events that shape the living standards struggle for the working-class majority.

“Initial submissions” – 34 of them so far – show the ACTU claim for a 5% increase and employers seeking 3.5%. Inflation is at about 4.2%

The AWR 2026 proceeds alongside the Commonwealth Budget and the Reserve Bank’s (RBA) next meeting on interest rates. Nevertheless, the AWR is the single most important opportunity for low-income workers to struggle to take on their affordability problem, now haunted by the twin spectres of another illegal imperial war and stagflation.

There is precious little democratic content in each of these living standards signposts.

In the AWR, the democratic right to strike is prohibited for nearly 3 million working-class Australians and is accompanied by restrictions on organising rights, despite recent improvements. Thus, the “rules” of the AWR are stacked against low-income workers.

It is essential that union, environmental and social welfare activists learn how best to intervene in the AWR to take from the rich and share back to the majority and to Nature. That will take levels of mass defiance not seen for decades.

Almost certainly, the war and its associated stagflation will see employers intensify pressure to implement an effective wage cut as the process unfolds.

The AWR process directly sets the National Minimum Wage (NMW) and the minimum rate for every job classification in every industrial award, about 120 of them, and nearly 3 million workers.

Currently, the National Minimum Wage (NMW) is $948 per week, and award rates are a percentage above or below that relative to age, employment status, and skills used.

The AWR decision also indirectly impacts both enterprise and multi-enterprise enterprise bargaining, and informal one-to-one “bargaining” between individual workers and their employer.

The NMW and award minimum rates are the means to work out whether wage theft is happening.

The process is controlled by the Fair Work Commission (FWC) under legal requirements in the Fair Work Act 2009 (FWA09, as amended). The head of the FWC sets up a “special panel” of commissioners and experts that is required to conduct a consultative process with “interested parties” that includes documentary submissions and, usually, one face-to-face hearing towards the end. There is no bargaining, just consultation and polite argument.

FWC procedural and final decisions, and submissions from the “interested parties”, are posted for public access.

The “special panel” hands down its decision about mid-June so that any new minimum rates can apply in the first full pay period in July.

The union movement does not run a campaign, either industrial or public, except perhaps a small demonstration in the final stages of the process.

There are deadlines for follow-up submissions and one face-to-face consultation over one day at the end.

The major “initial” submissions - at the FWC’s dedicated website - came from the employer organisations, the ACTU and six unions, the Commonwealth Labor government, and others, like state governments, the Australian Council of Social Services (ACOSS), and the Centre for Indigenous People and Work (CIPW).

Every submission has its own talking points. However, at this stage, the focus should be on the employers, the ACTU, the 6 unions, and the Commonwealth government.

Lurking at the corner is the Reserve Bank. It does not make a submission, but it will seek to insert its preference into the public discussion. In essence, its starting point is “wage increases cause inflation”. In turn, the “special panel” will consider what they read in RBA statements in their final decision. All “informal”, but these state instruments do share a common belief in pro-employer, “dry” economics.

The employer submissions

The claim is only 3.5%. That’s less than projected inflation. The Australian Industry Group has called for a moderate outcome without making a claim, although, of course, they insist the ACTU claim is “unsustainable and must be rejected”. They are waiting for the war impact and will probably put a specific position in early May.

The Labor government

While not specifying a number, the Labor government seeks a “real” wage increase. In practice, this will mean, if agreed, a marginal improvement relative to prices and a tiny catch-up relative to what workers have lost since 2021 (and longer).

Australian Council of Social Services

ACOSS proposes a “substantial increase” of the NMW to at least 60% of the full-time median wage. What that means requires a separate discussion on several points. In any case, it is a naïve claim given that ACOSS shows no capacity to develop or contribute to the popular power required to make it possible.

ACOSS support the C12 rate to be the lowest pay rate, the new NMW, in the award system.

The Centre for Indigenous People and Work supports the ACTU’s 5% and explains specifically how wages paid to Aboriginal workers are undervalued by the current system.

The ACTU’s main claim is for a 5% increase for all workers on the NMW and on minimum rates in Australia’s 120-odd industrial awards. The ACTU says, “That would deliver urgently needed real wage growth for award workers, and make some progress towards the restoration of award wages at 2021 levels.”

There are 3 secondary proposals:

· To set the NMW at the higher C12 rate - $982.40 – and its equivalent across all other awards (i.e. new starters would still get less). Notionally that’s about 3.63% for many workers on the current NMW. (S. 5.3, para 134 etc). The ACTU proposes 4 principles to act on this decision, one of which ensures that the increase is not paid for by workers on higher minimum rates. (Para 137) If granted that would mean about 8.6% increase for NMW workers.

· To set the apprentice rate for those who turn 18 to the relevant adult apprentice rate. (Para 139)

· To “remove junior rates of pay for employees aged 18 years and over”, as in the recent decision in 3 retail industry awards.

Six specific unions lodged submissions that support the ACTU’s 5% and elaborate on the secondary claims and closing the gender pay gap.

Before a deeper discussion, there are three threshold points.

First, the ACTU-unions’ claim is for all workers on the NMW and low wages, whether they are members of a union or not. For those workers, it’s the only way the affordability of their daily life might be improved.

There are also substantial numbers of workers being paid marginally above the minimum through non-union enterprise agreements or a privately “negotiated” deal with their employer. The award increase only goes to them if they are alert to the higher rates and their employer is willing to pay them, or if they join their union.

Second, the ACTU submission is again the most thorough, supported by referenced economic data and other information. Of course, it should be studied critically, but it is the best submission to learn the major issues at stake. The time and effort should be part of the bread-and-butter work of union and other activists.

Third, like most submissions, it argues its case relative to each of the legal requirements in S. 284 of the Act in the FWA. These relate to the general state of the economy using specific indicators (productivity, inflation, etc.), gender equality, social inclusion relative living standards, the needs of the low-paid, and fair minimum wages for junior employees, trainees and disabled workers.

Part 2 discusses key economic aspects of the ACTU case, including the “profits problem”.

The key issue is familiar: should workers pay for an economic downturn that combines with inflation, pushed along by a vicious imperial war launched by the USA against the people of Iran and Palestine?