(Image: Tom Red/Private Media)

Here’s a tale about industrial relations in the aftermath of a plague.

In 1348 the Black Death reached England and wiped out 40-60% of the population. One of the many consequences of that colossal tragedy was that labour became dramatically scarcer in the English economy.

Normally that would mean a dramatic improvement in wages as employers — primarily landowners, because this was a medieval agrarian economy — bid for scarcer labour. Except, employers also happened to wield enormous influence as the aristocratic advisers and agents of the king, Edward III. So they got a law passed a year later, called the Ordinance of Labourers, to ban wage rises above pre-Black Death levels and prohibit employers from trying to lure workers with higher wages.

It wasn’t overly successful, so in 1351 they tried it again with the Statute of Labourers. And they kept trying to use their access to political power to prevent market forces from driving wages up over the ensuing decades.

In the end English peasants got so pissed off with the constant attempts to suppress their income there was a truly bloody Peasants’ Revolt in 1381.

Things have changed a great deal in the last 670 years — certainly in relation to our ability to respond to pandemics. But employers haven’t changed much. They’re still using their access to power — brought with donations to the Coalition and their alliance with the business press — to prevent market forces driving wages up.

And as yesterday’s wage price index (WPI) data for the December quarter shows, they’re succeeding.

That data shows there are only two possibilities about the incessant chatter from business and economists about a tight labour market that we’ve now been hearing for over 12 months.

Either it’s complete garbage and employers are simply making up claims that they’re unable to find workers, or we have an industrial relations system skewed so savagely against the interests of workers as to prevent the normal functioning of labour market pressures. Australian workers are being treated no better than the peasants who survived the plague, because employers and the government are using the legal system against them.

The wage price index for the December quarter released yesterday showed wages growth of just 0.7% and 2.3% for 2021 as a whole; it was 0.7% and 2.4% for the private sector. The result for private sector workers was unchanged from the September quarter. That is, things didn’t improve at all for workers throughout the second half of 2021.

In fact in real wage terms, Australian private sector workers went backwards by 1.1% — and 0.6% in the December quarter alone. And, for those neoliberal economists who insist you can’t use headline CPI to discuss real wages, real wages growth was even below the Reserve Bank’s (RBA) preferred trimmed mean inflation result of 2.6% (presumably when those economists go to Woolies, they get some secret “trimmed mean” discount that the rest of us miss out on).

And so, for all the whingeing about the lack of workers over the course of 2021, there’s little evidence that employers are prepared to pay more — or that workers have the power to bargain their way to better outcomes. Wages growth remains stuck at pre-pandemic levels. Just as employers like it. Just as employers in 1349 liked it.

Too harsh? Melodramatic? Well, let’s talk about wage theft.

At the same time of the release of the wage price index, Woolworths — speaking of — was ‘fessing up that the bill for its wages underpayment scandal had soared to $571 million.

Any more and we’re starting to talk real money, huh?

Woolies has been assiduous in tracking its underpayments and compensating workers for them — good on them. But it’s a truly staggering amount even for a major employer.

Want to know why wages have been stagnant for Australian workers? It’s partly because not just Woolies (and Coles) but a large number of our biggest employers operating across a huge range of industries have systematically ripped their workers off — so much so that it’s entirely appropriate to say that wage theft is part of the business model of Australian capitalism.

And wage theft is coupled with an industrial relations system in which the right to strike has been dramatically curtailed — reducing strike action to levels so low you need a microscope to see it (witness the hysterical reaction of politicians — from Scott Morrison on down — to what they thought was a NSW rail strike but which turned out to be entirely the fault of NSW rail bureaucrats and the buffoon David Elliott).

Private sector economists are still tipping wages growth will surge and the Reserve Bank will have to lift interest rates. At least the RBA itself is staying realistic, insisting in its February statement on monetary policy “most firms in the bank’s liaison program are not anticipating wage increases to move beyond the two to three per cent range over the coming year. This is consistent with other surveys of wages growth expectations”.

And the RBA also pointed out that: “aggregate WPI outcomes have continued to be weighed down by slower growth in wages for jobs covered by public and private enterprise agreements. These subdued outcomes are consistent with announced government wages policies and the multi-year duration of many private sector agreements.”

Another example of how the IR system is structurally designed to prevent pay rises even when employers claim they can’t find labour.

How long until workers revolt? You can bet it won’t be 30 years.