As the Government goes about this task it is perhaps useful for British unions to reflect on the recent experience of their Australian counterparts in the area of wage fixing and collective bargaining.
Australia has never had a statutory minimum wage of the type that will be adopted here in Britain. In fact, Australian unions have fought vigorously in recent years against laws setting down 'minimum pay and conditions' enacted by conservative state governments around the country.
Generally they have done so with good reason, as in the Australian context, these state wage mechanisms have tended to provide for the initial establishment of a minimum pay rate by Ministerial fiat, and for review only once annually (again, by the relevant Minister and without provision for representations to be made by the industrial parties).
The result has been the establishment of fairly paltry minimal levels which are then left to wither rather than being updated to meet changing economic circumstances.
However, what Australia has had for many years at the federal (national) level is a system of compulsory conciliation and arbitration which has produced a framework of regulation by industrial 'awards'. These not only specify the minimum wages and conditions of employment for workers covered by them, but have also operated, in effect, as the minimum terms and conditions of employment for non-award employees in many industries.
Until the election of the conservative Liberal/National Coalition Government in March 1996, the intent of government policy was that awards should provide a 'safety net' of secure, relevant and consistent wages and conditions of employment, above which bargaining could take place at enterprise level. One way in which awards were updated was through the wage increase that flowed from the decisions of the Australian Industrial Relations Commission in 'National Wages Cases'. Held at least annually, wages cases have provided unions with an opportunity to seek and justify increases in award wages in key industry sectors. Employers could of course oppose these claims, and the Commission would then decide what increases (if any) should be awarded, having regard to prevailing economic conditions and the needs of the low-paid.
In addition, federal law briefly (from 1994 to 1997) allowed unions to make applications for the setting of minimum wages under the ILO's Minimum Wage-Fixing Convention, although these provisions were not widely used.
While there has long been above-award collective bargaining at industry level in Australia, the phenomenon of 'enterprise bargaining' is relatively recent. It has become a prominent feature of Australian industrial relations in the 1990s, with successive amendments to federal legislation encouraging parties to federal awards to negotiate enterprise agreements, and unions increasingly relying on such arrangements rather than awards as the primary vehicle for delivering wage increases to their members. It is estimated that some 65% of eligible employees are now covered by enterprise agreements at the federal level.
So how have Australian workers fared in recent times under this system of enterprise bargaining conducted above the floor of a de facto minimum wage? Economic data suggests that wages growth on Australia is slowing, with average earnings increasing by only 4.1% in 1994-95 compared to around 8% in 1986-87.
The real picture, however, emerges from a comparison of various industry sectors. This shows while some workers (such as those in the mining, construction, and warehouse and distribution industries) have done very well since the advent of enterprise bargaining, some 20% of the workforce (for example, machinists in the textile and clothing industries, labourers employed outside construction, and cleaners) has not received a pay increase in the last five years, other than through adjustments to the award 'safety net'.
Responding to this growing disparity between workers who have secured annual wage increases of up to 15% through enterprise bargaining, and the remainder who (unable to access increases through bargaining) have become reliant on 'safety net' increases, the Australian Council of Trade Unions launched a claim in pursuit of a 'living wage' in July 1996. Essentially seeking to close the gap between these two groups, the claim sought the establishment of a minimum weekly wage of A$380 (around £170) for workers not already receiving that level of pay, and increases of A$20 (£9) per week for other workers who had not received an increase through enterprise bargaining. Earlier this year the federal tribunal handed down its decision on the claim, granting this group of low-paid workers a wage increase of only A$10 (£4.50) per week.
In assessing the effectiveness of Australia's awards system and the process of enterprise bargaining that has grown around it, it must be remembered that (although average wages growth has slowed, and disparities have emerged) workers received significant non-wage benefits over the period of the Labour government from 1983 to 1996. Under successive 'Accord' agreements between the ACTU and the federal Government over this period, the 'social wage' delivered support for workers and the unemployed through the 'Medicare' health system, superannuation and occupational health and safety legislation, workplace child care, and direct payments to struggling families.
The Australian experience suggests that it is in the area of bargaining above the minimal that there are real gains to be made for unions and their members. The award 'safety net' provided a sound basis for collective bargaining, putting Australian unions in a relatively strong position from which to commence the bargaining process. Similarly the minimum wage, when it is operational in Britain, will not only ensure that the low-paid are guaranteed a decent minimum hourly rate of pay, it will also strengthen the hand of unions in collective bargaining negotiations.
With only 37% of British employees covered by collective agreements, it seems that the minimum wage may present a real opportunity to improve both the wage levels attainable through, and the spread of, collective agreements in this country.