The wage explosion & economic crisis

Updated time

Last updated

05 September 2016

Two serious economic crises in 1980–81 and 1986–87 led to fundamental changes in Australian labour relations.

At the start of the 1980s Australia was undergoing its worst recession since the 1930s. Inflation and unemployment rose, and workers often lost the benefits they had won because inflation meant higher prices for household goods, and some workers lost their jobs.

In 1981 industry agreements led to unsustainable labour cost increases, which had a severely adverse effect on the national economy. In the National Wage Case (1982) the Commission introduced a wage pause to last until June 1983. It stated:

“The Commission is faced with an unprecedented situation. Secondly, all eight Governments agree that a wages pause is necessary on economic grounds.”

Then, by a cooperative effort, trade unions, employees, employers, employer associations and Governments developed a more sustainable and economically responsible system of increasing wages. The new federal Labor Government and trade unions had reached an ‘Accord’, which supported these changes. Employers largely opposed the ‘Accord’ because they did not agree with wage indexation and other policies.

Changes were made which gradually brought an end to the multi-tier wage increases that the Commission had complained about since the 1960s. The main increases arising from the minimum wage system would be those decided in national wage cases.

Another economic crisis in 1986–1987 led to fundamental changes to the award system to increase industry productivity and allow employees to enjoy a more varied and satisfying work experience.

Beginning in 1988 all award minimum wages were restructured to align with each other, on the basis of the test of skill, responsibility and the conditions under which work is performed. There would be one set of minimum wages, not separate minimum wage systems for each industry.

1973: Factory line in Adelaide