Gas Employees Case

Updated time

Last updated

10 January 2017

Federated Gas Employees Industrial Union v. Metropolitan Gas Company and Others

(1921) 15 CAR 838, Powers J, President, 23 September 1921

Summary

The Royal Commission on the Basic Wage (the Piddington Report) made a finding in 1920 about the cost of living of a family of five. In the Gas Employees Case, Justice Powers refused to replace the Harvester wage with the higher Royal Commission amount because the economy could not support such an increase. This established the third important leg of Court principles in fixing wages. Harvester had established a 'living' or 'family' wage on the basis of an assessment of what was needed to support a family of five, and this amount had been indexed to maintain its real value in line with inflation. The Gas Employees Case made explicit the importance of economic constraints. Wage increases could not be made beyond what the economy could support.

The Commonwealth Court of Conciliation and Arbitration considered the findings of the Royal Commission. Mr Justice Powers, the President of the Court, said in this matter and subsequently:

I am quite satisfied that an increase in the basic wage throughout the Commonwealth would affect 1,000,000 workers directly. The importance of the case is, therefore, appalling to one who has to deal with it from either point of view, more particularly because the well-being and comfort of thousands of men, women and children will be affected, for a time at least, by the decision, whatever it is. The responsibility of attempting to decide such a question is increased when it is recognised that the Court cannot, by any order, secure to the workers more than the industries can pay, and the Court cannot fail to recognise that any great additional burden placed on industries at the present time is bound to cause further unemployment and misery to workers, especially to those on the basic wage whom it is intended to benefit. [p.841]

...
 

The Court has no fairy wand to wave, and compel employment at wages sufficiently high to allow workers to enjoy any standard of comfort the Judge for the time being, or any Royal Commission, thinks it desirable workers in Australia ought to enjoy, or to provide the money to pay the wages necessary to allow them to do so.

The Court cannot by any order compel employment. The Court can by its orders, where the parties are in dispute, cause unemployment by fixing rates industries cannot pay and add to the large number of unemployed in every State at present.

The Court is not the steam engine that gives the necessary power to carry on the industries. It can only act as between employees and employers and the community as a governor on an engine ...

One would have thought, during the argument, that the combined unions believed that the Court had been authorized to and could, by fixing a basic wage, raise the standard of comfort of the unskilled workers in Australia to a higher state than was possible in any other country in the world; and make them live up to that standard; and that the industries here would not be affected by the wages paid, and that the conditions under which labourers worked in other civilized countries would not affect the workers of Australia. [p.849]

...

I cannot help asking, Are the executives of the combined unions justified in asking the Court in this time of depression to grant ... £1 10s. a week extra to the 438,735 young unmarried men (in some cases to youths of eighteen years of age receiving the adult wage), and to 167,791 married men without children under fourteen years of age, while thousands of their fellow unionists are out of employment altogether, and are anxious to get work at any wage that will keep them; while many are forced to seek relief from benevolent societies and from Governments. While thousands of employees are asking this Court to waive part of their margin for skill so as to let them continue to be employed. While trade unions are asking employers to distribute the work by giving four or five days’ work to all, so as to save dismissals, even if the men have to live at less than the Court’s present basic wage. While contracts are being let to foreign countries because the present wage is too high, and while they know that all children in families of unskilled workers where there are more than three children do not, and cannot, under any practicable or constitutional award this Court can at present make, or under the Commission’s finding, get enough to live on in any sort of reasonable comfort or to live in even three-roomed houses, because the money for rent of a decent house is wanted for food to keep them alive. [p.867]

The Court concluded that:

For the reasons mentioned I propose to continue the fair and practicable minimum wage the Court has adopted for so many years, instead of adopting the higher standard fixed by the Royal Commission, which is not practicable at the present time as a flat rate. [p.873]

Powers J. argued that the task given to the Royal Commission was that of ascertaining the cost of living, not finding what should be the Basic Wage, and that it did not recommend that its findings be the Basic Wage. He was also critical of the methodology adopted by the Royal Commission, for example that a five roomed house was necessary given the very limited number of such houses, the allowance for clothes, the rental assessment.