Published 3 October 201314 October 2013 · Main Posts / Politics / Polemics The ACTU and ‘wage restraint’: a reply to Matt Cowgill Marc Newman In a recent article for the Guardian, Matt Cowgill, an Australian Council of Trade Unions researcher, took Peter Reith and his business backers to task for their unfounded arguments about the ALP’s economic management. Like Matt, I agree that the hysterical screams of business for greater power in the labour market are disconnected from economic reality, simply a device to garner higher profits at the expense of wages. Combatting the arguments from Reith and his fellow neoliberal zealots is an essential part of enabling workers and unions to fight for the advancement of working people. So I opened the article hopefully, expecting a damning critique from a prominent labour intellectual using the other side’s inconsistency, shifting arguments and dishonesty as part of a larger effort to outline a worker-centred approach to economic development. While agreeing with the main thrust of Matt’s arguments against Reith and co, I was appalled to encounter what could only be described as an ideological justification of the single biggest strategic disaster in the Australian labour movement’s history: the Accord. In mounting his case for Labor’s economic management, Matt argues: there was reason to think that at least some of the rise in unemployment may have been caused by too-rapid wage increases. Union leaders recognised this, and entered into the Accord with Bob Hawke’s Labor government to secure an increased ‘social wage’ (like Medicare) in return for wage restraint. In other words, he thinks that the economically correct strategy for the union movement to take in 1983 was one in which its membership’s material position went backwards. The Accord gutted the union movement. The social peace and real wages decline so craved by the business community in the 1980s was achieved by demobilising the movement, removing any control at the workplace level over union decision-making, disciplining those who took exception to the strategy of real wage cuts embodied in the Accord, and demolishing the political basis for fighting unions. The story that followed is a big part of what we contend with today: after entering the Accord with above 50 percent of the workforce in unions, we have lost more than half that, and now sit at approximately 18 percent. In 2011, Paul Keating praised the ‘big contribution from the unions … of reducing real wages and letting the profit share rise.’ This decline in real wages has been elaborated further by other commentators. Controls on prices never happened. The ‘social wage’ which was supposed to compensate either never eventuated (industrial democracy), or was watered down (Medicare). Superannuation contributions remain too low to compensate for the public pensions that it was designed to displace, not to mention that the ‘funds have lost a greater share of their members’ funds since the global financial crisis than any other pension system in the advanced world, with the exception of Iceland.’ All of this has to be placed alongside cuts in the social wage, including the abolition of free education, and the regressive consequences of the other structural reforms of the Accord period. On any objective accounting, a strategy that delivered a much weaker union movement, worse material outcomes for workers than under Fraser, as well as legalistic union institutions that have been ill equipped to cope with the post-Accord era, must be reckoned a disaster. The Accord is an object lesson in what not to do. Yet Matt praises it. This is dangerous territory. If we are to accept his logic, unions would become the parasites the right wing claims they are. Instead of advancing the interests of their members, they would be a kind of ‘rational’ substitute for the irrational economic management offered by business and its allied politicians – yet one still focused on increasing profits at the expense of workers. Economics is necessarily partisan, since it speaks to economic policy and to the question of the division of social output: to the profit/wage share first and foremost. The Reiths of this world can be relied upon to stack the deck in favour of business and the profit share. Yet by playing at ‘objective’ economic analysis, Matt has ended up simply replaying the basic economic approach he is notionally confronting, albeit with a slight social democratic colouration. But what is most dangerous in Matt’s position is that if we accept the logic behind his praise of unions embrace of ‘wage restraint’, we would not learn from history but repeat it. Unions need hard-headed economic analysis. What we do not need is more pro-business economics in the leading councils of our movement. We need the arguments, facts and ideas that will help workers understand that what Reith and his friends are peddling is a weapon against them, nothing more and nothing less. We need ideas that help us assert the interests of the great majority of Australians who work, against the tiny minority who benefit from Reith’s free marketeering. The union movement needs to recognise the corrosive influence ideas like ‘wage restraint’ and the Accord still represent for our movement. So for me, and I believe an increasing number of other unionists, Matt’s article is unsatisfactory. I am left asking the question of our friends in the senior ranks of the union movement: why are we entertaining this self-destructive rubbish again? Marc Newman Marc Newman works at the Fire Brigade Employees' Union in Sydney, and contributes to the blog Left Flank. Opinions and political errors are all his own. He tweets as @marc_newman. More by Marc Newman Overland is a not-for-profit magazine with a proud history of supporting writers, and publishing ideas and voices often excluded from other places. If you like this piece, or support Overland’s work in general, please subscribe or donate. Related articles & Essays First published in Overland Issue 228 1 June 20231 June 2023 · Politics Turning peaceful protesters into criminals—again Evan Smith So the Summary Offences (Obstruction of Public Places) Bill 2023 has been passed by South Australia’s Legislative Assembly and will become law. Fifteen hours of debate in the upper house, led by the Greens and SA Best, could not overturn the bill that was reportedly rushed through the lower house in just twenty-two minutes a fortnight ago. 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