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Issue #1534      8 February 2012

Equal Pay

Vigilance required

Fair Work Australia’s (FWA) long-awaited Equal Remuneration decision for social and community services workers (SACS) was greeted with mixed feelings of jubilation and disappointment. The unions and their members were jubilant, having won an important victory, a new milestone in the ongoing struggle for equal pay. The disappointment is that the decision will not be fully implemented until December 2020, and that there are no guarantees that some of the increase will not be funded by cuts in employment, resources and services to the community.

There was one dissenting voice on the Full Bench, vice president Graeme Watson whose decision could lay the basis for a court challenge by several employer groups who opposed the claim.

The amounts awarded range from 19 percent for the lowest paid through to 41 percent for the highest paid. The decision falls short of the original claim, which was based on an equal pay decision in Queensland, but is still highly significant. The increases will be phased in over nine annual instalments, commencing on December 1, 2012 with the last one due on December 1, 2020. Over those years, it will require considerable vigilance and effort to prevent the decision being undermined by shortfalls in award increases from minimum wage decisions and outcomes of any collective bargaining agreements.

There is always the danger that future governments could have the decision overturned by FWA or under a new industrial relations system. The decision will need to be defended to ensure its full implementation.

Nonetheless, it is an important decision, which is the culmination of more than two years of campaigning and an incredible amount of hard work in amassing the evidence and presenting the case to FWA. The Australian Services Union and other trade unions in the sector are to be congratulated.

Around 80 percent of the 150,000 or more workers in the industry are women. The services they provide include family support, disability, youth and children’s, women’s, community legal centres, drug and alcohol, home and community care, specialist health, Indigenous, tenancy and mental health. They are highly qualified and skilled professionals carrying out extremely responsible and important work for the community without corresponding recognition, yet some of them could be earning more money stacking supermarket shelves.

Work undervalued

The average full-time wage in Australia is around $68,000 per annum, yet it is not unusual for a highly skilled graduate working in the SACS industry, with five or more years experience to be earning $45,000 to $50,000.

The case is the first to test the equal remuneration section of Labor’s Fair Work Act which “allows FWA to make orders to ensure that there will be equal remuneration for men and women workers for work of equal or comparable value.” The key aspect of the new provision is the inclusion of the term “comparable” in addition to “equal value”.

Although it affects a workforce that is predominantly female, the comparison of SACS workers is with men and women in the higher paid government sector, not just with men. It is not a direct comparison of female workers with male workers as in previous equal pay cases.

One of the key reasons for the wage gap between SACS and work of comparable value in other areas is the nature of their work – caring – which has historically been seen as “women’s work” and, so, lower paid.

Another important reason for underpayment lies in a relatively recent shift in service provision from the public sector to the not-for-profit and for-profit private sectors. Neo-liberalism has seen governments at all levels turn to the private sector, including religious institutions and charities, to provide service on a commercial basis.

The Commission, in an interim decision on April 16, 2011, confirmed that the work of social, community and disability services (SACS) staff in the non-government sector is undervalued. “We have found that employees in the SACS industry are predominantly women and are generally remunerated at a level below that of employees of state and local governments who perform similar work,” FWA said.

While finding gender to be an important factor it also identified other contributing factors, and delayed a final decision until it heard further submissions on the extent to which gender was a contributing factor to the pay gap. The final decision handed down last week attributes around 60 percent of the gap to gender, and has set the increases to meet that proportion of the gap. It does not attempt to fully meet the gap.

The decision also contains a loading of four percent to also be introduced in nine equal instalments to compensate for the fact that ongoing wage increases are larger in the government sector where union enterprise bargaining agreements (EBAs) are the norm. In the SACS sector there is far greater reliance on awards, which only provide minimum rates. The FWA changes will be made to the award, and will be absorbed into higher pay rates under any EBAs in the sector.

In its submission to FWA, the Gillard government argued that FWA must discount comparators that are not gender based – such as the weak capacity of non-government workers in SACS to negotiate higher wages in EBAs.

This flew directly in the face of the union’s application which argued that the inability of workers to bargain around wages (due to the nature of their employers being largely government funded) is one of the main reasons that an Equal Remuneration Order is required – this is the only way to increase wages in the industry.

The federal government also argued that Fair Work Australia must consider the government’s strategy to return the budget to surplus, failing to make a commitment to fully fund any pay rises. “If any additional government funding is provided, it would likely come at the expense of other government funded services,” it warned.

The Gillard government later made a commitment to fund the outcome of the claim to the tune of $2 billion or more over four years. Gillard did not indicate what cuts will fund the $2 billion. Victoria’s Liberal Party Premier Ted Baillieu reflected the poor attitude of state governments saying, “The bottom line is the choice for state governments, and private sector bodies, to fund this or cut services.”

Many of the smaller employers in the industry supported the claim, but Mission Australia, and several employer organisations strongly opposed it. The Australian Federation of Employers and Industries (AFEI) had a war chest of $1.5 million dedicated to fighting pay equity for community workers. It used to go by the name, Employers First, implying workers last, but later changed it as it became too embarrassing. The AFEI told FWA that award rates of pay are good enough and already provide equal pay and that if SACS workers won equal pay other low paid workers might get a pay rise as well!

Australian Business Industrial (ABI) said the modern award rates of pay are already appropriate for the skill, responsibility and conditions under which work is performed and that differences in pay rates were not gender based.

Vice president Watson, who formerly worked for the legal firm Freehills that played a key role in drafting the Howard government’s WorkChoices legislation, opposed increasing wages in the SACS sector. In his minority decision, he said, “Governments previously conducted many of these services themselves but have moved the delivery of the services to the not-for-profit sector because it was considered that the not-for-profit sector could deliver the services in a more efficient and cost-effective manner.”

It might deliver them at less cost – that is because they pay low wages or the work is done by voluntary labour!

Watson found various aspects of the claim to be “highly unusual”. For example, “An equal remuneration order is sought for both men and women workers… Not only is no comparison sought to be made with male employees employed by the same employer – no comparison is sought to be made with male employees of any other employer. The comparison that is sought to be made is with public sector employees who perform similar work.”

Watson said it “would be inconsistent with relevant statutory requirements and an inappropriate exercise of the discretion of Fair Work Australia” to make such an order.

His objections go to the heart of the new provisions of the Fair Work Act, and the essence of the case.

As stated earlier, there is a real danger that his decision could be used for an appeal to the courts.

The struggle is not over. State and federal governments must fully fund the decision and not at the expense of jobs or other services. As contracts come up for renewal, governments should employ the workers carrying out those services on a permanent basis, on prevailing public sector wages and conditions. That would close the gap immediately. Contracting out and privatisation should be halted and reversed. The provision of social services should be provided on the basis of need, not commercial considerations by governments.  

Next article – CPA campaign sprints to the line

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