The post-war period: 1953–1965 basic wage inquiries

Updated time

Last updated

20 December 2016

During this period inquiries into the basic wage were conducted, and there was considerable debate about the relative importance to be placed on capacity to pay or the cost of living as measured by the consumer price index. However, the Court then Commission consistently rejected trade union applications to re-establish a formal system of wage indexation based on the consumer price index, consistent with the rejection of such an approach in 1953. Instead inquiries were held at which all relevant economic and social factors were considered and given different weight according to the circumstances.

In 1953 the Court decided that wage indexation was not compatible with the ‘capacity to pay’ principle, and brought it to an end, including the removal of automatic adjustment clauses in awards[1]:

‘There is no ground for assuming that the capacity to pay will be maintained at the same level or that it will rise or fall co-incidentally with the purchasing-power of money. In other words, the principle or basis of assessment having been economic capacity at the time of assessment, it seems to the Court altogether inappropriate to assume that the economy will continue at all times thereafter to be able to bear the equivalent of that wage, whatever may be its money terms. Whatever justification there may be for applying such an adjustment system (to a wage assessed according to national economic capacity) in a closed economy, there can, so it seems to the Court, be none in an economy such as ours where so much of our productive effort depends for its value upon prices of exports and imports beyond the control of any Australian authority.’[2]

After bringing to an end quarterly wage indexation, the Court said:

‘... we now specifically intimate that it will be to the total industry of the country that the Court will ultimately pay regard in assessing the capacity of the community to pay a foundation wage. In fine, time and energy will be saved in future cases if the parties to disputes will direct their attention to the broader aspects of the economy, such as are indicated by a study of the following matters:-

Employment.
Investment.
Production and Productivity.
Overseas Trade.
Overseas Balances.
Competitive position of secondary industry.
Retail Trade.’[3]

The basic wage was increased at Basic Wage inquiries as follows:

  • 1956—10 shilling increase[4]
  • 1957—10 shilling increase[5]
  • 1958—5 shilling increase[6]
  • 1959—15 shillings a week increase[7]
  • 1961—12 shillings a week[8]
  • 1964—20 shillings a week increase[9]

Claims by employers for a reduction or by trade unions for an increase in the basic wage were refused in 1952-53[10], 1960[11], and 1965[12].

Wage indexation was not introduced again until 1975. Trade unions frequently sought its reintroduction, and employers opposed it. However, ‘the needs principle’, which included changes to the cost of living, was a consideration given weight in all decisions.

Margins were adjusted more infrequently, and at separate hearings. 

Footnotes

[1]Basic Wage Inquiry (1952-1953) 77 CAR 477

[2]Ibid, p.497

[3]Basic Wage Inquiry 1953 (1953) 77 CAR 477 at 509-510

[4]Basic Wage Inquiry 1956 (1956) 84 CAR 157

[5]Basic Wage Inquiry 1957 (1957) 87 CAR 437

[6]Basic Wage Inquiry 1958 (1958) 89 CAR 284

[7]Basic Wage Inquiry 1959 (1959) 91 CAR 680

[8]Basic Wage Inquiry 1961 (1961) 97 CAR 376

[9]Basic Wage Inquiry (1964) 106 CAR 629

[10]Basic Wage Inquiry (1952-53) 77 CAR 477

[11]Basic Wage Inquiry (1960) 94 CAR 313

[12]Basic Wage Inquiry (1965) AILR 324