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Proposed return to wage indexation a massive backwards step



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MEDIA RELEASESENATOR FRED CHANEY DEPUTY LEADER OF THE OPPOSITION LEADER OF THE OPPOSITION IN THE SENATE SHADOW MINISTER FOR INDUSTRIAL REIATIONS

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PROPOSED RETURN TO WAGE INDEXATION A MASSIVE BACKWARDS STEP

The ACTU's intention to seek a return next year to a wages system based on movements in the inflation rate represents a massive backwards step.

Bill Kelty is trying to use the present ACTU Congress to sell an image of a union movement that is forward looking and progressive. Nothing exposes what a sham this is more than the decision to seek a return to the totally discredited system of wage indexation.

Wage indexation was abandoned in 1986 because all parties - including the ACTU - recognised it was incompatible with Australia's balance of payments problems.

Not only does it produce increases that are unsustainable at a macro level, but it acts as an obstacle to micro economic reform by preventing shifts in relative wages.

Since then there have been some faltering steps to relate wage rises to developments at the industry or enterprise level - though the system has still tended to produce uniform wage rises in excess of productivity.

Yet instead of seeking to build on recent changes to create a system where wages are related to the economic circumstances of the industry or enterprise concerned, the new, "forward looking" ACTU is proposing a return to a

system of across the board wage rises based on movements in the Consumer Price Index.

It is time some of the more economically literate members of the Government told the ACTU that a return to wage indexation is not on.

Nothing could be more likely to guarantee a further fall in real wages. What the trade unionists of Australia should pursue is the productivity lift which would deliver increased real wages.

CANBERRA 26 September 1989 Contact: Keith Kessell (062) 77 3170

COMMONWEALTH PARLIAMENTARY LIBRARY MICAH