Can we have better wages and better conditions at the same time?


Along the way, he can buy up to 12 weeks of extra annual leave or take up to 12 months paid leave as a career break.

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At other firms, he might qualify for a paid six-month sabbatical after a long period of service.

If he worked for a trendy start-up, he might get a day off on his birthday. Or if born overseas, a day off for the national holiday of his country of birth.

And we wonder why Australia has record low wages growth.

Improved workplace conditions are portrayed as a “cost to business”. But how much are workers paying for this flexibility through low wages growth without realising it?

And how many of these conditions are a luxury that workers would trade for a pay rise?

Australia’s anaemic wages growth is puzzling economists. It should be higher when unemployment is 5 per cent. Low productivity growth, technology, outsourcing and growth in part-time jobs are key suspects in the wage malaise.

Less considered is the effect of greater workplace conditions on wages growth. On paper, many workers earn the same pay for the same number of hours compared to a few years ago. But more of those paid “hours” are on non-work tasks.

Simply, if your four weeks of annual leave morphs into eight because you access extra leave, somebody has to cover. That’s a big cost for the employer.

If you buy a few months of extra leave, take a year off to care for the grandchildren before returning to work, have a sabbatical or time off to travel, that’s a cost. The employer needs extra staff but does not want to increase the overall labour bill, so keeps a lid on wages growth.

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I’m not against better workplace flexibility within reason. The more we do to help new parents, women and men, juggle work and family, the better. The more we recognise the value of paid and unpaid carers, and support them, the better. So too with domestic-violence victims.

If Westpac or other firms believe greater workplace flexibility helps attract and retain top talent, boosts productivity and enhances corporate social responsibility, more power to them. In this instance, there should be no trade-off between workplace flexibility and pay rises because enhanced leave arrangements boost output and profits.

Moreover, some workers will gladly trade a pay rise for better workplace conditions. A new parent might value extra time off and flexible working hours more than a small pay rise. Just as someone who cares for a sick family member could prefer paid leave.

It is also true that other workers, particularly the lowest paid, cannot access anywhere near the same workplace conditions mentioned. Or worse, are exploited by grubby employers.

My point is: we don’t know how this general improvement is workplace conditions, in blue-collar and increasingly white-collar firms, is affecting wages growth. And how the cost of greater workplace flexibility is shared between industry and workers.

Lots of workers may have received a pay rise by stealth, through access to better workplace conditions and more days off, without realising it.

Another concern is the compulsory nature of workplace enhancements. I may not want or need access to parental, carers, study or charity leave. Or want to buy extra months of unpaid leave, take a year off to care for the grandchildren or have a sabbatical.

Cross-subsidisation of workplace flexibility is an issue. A single worker slogs away for 48 weeks a year and barely takes a day of other leave. A married colleague with children takes an extra four weeks of sick or carer leave and buys two months of unpaid leave each year.

Another colleague milks the system for all its worth, taking up to three months of paid leave each year through annual, sick, parental, carer and study leave.

Like it or not, employees who don’t access extra workplace conditions (or are not eligible) are subsidising those who use them — perhaps through lower wages; a higher workload to cover for absent colleagues; or less flexibility in their own job if they have to work over Christmas, for example, instead of married colleagues.

Another problem is the tendency for companies to follow each other with workplace trends. Do we really need to give staff a paid day off for their birthday, or to attend sporting competitions, or for their country-of-birth’s national holiday?

Who pays for this indulgence? Workers, customers or big business?

Tony Featherstone writes on Personal Finance specialising in Superannuation & SMSFs, Specialist Investments.

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