Hagglers form guide to higher ed wages

The proposals resulting from the Crossroads Inquiry were released in the May Federal Budget.
They herald a radical step towards user-pays education, greater inequality between students and the education that they have access to and greater inequality between universities.
The Americanisation of education in Australia will have the long term effect of creating division between institutions that will result in differences between wages and conditions of work.
Richer, well funded universities will be able to pay more and offer better conditions than less well funded universities.
This could lead to differentials to wages and conditions of workers and would particularly disadvantage workers at regional universities. The Minister's proposals to force university administrators to actively promote individual contracts is an attempt to undermine core wages and conditions achieved in the industry and they have not been welcomed by Vice-Chancellors. Below is a brief summary of the main proposals of the higher education `reforms'.

UNSW PAY DEAL

Union members at The University of New South Wales have endorsed a new three year agreement. The new agreement grants a 12.6 per cent pay increase over the three years of the agreement plus a $1,500 flat increase and $500.00 for any general staff member that does not move to a higher classification levels as a result of broad banding across the life of the agreement. The agreement gives commitments on maintaining or increasing the size of the general staff workforce and not increasing casualisation. Casual loading is increased to 23 per cent and adds a process for conversion of long-term casual employees. Maternity and adoption leave is extended to 14 weeks. The deal was negotiated by long standing branch officials and union representatives. In light of the Nelson proposals, Federal Secretary , David Carey remarked `they did not need advice from the Federal government to work out what their agreement should contain'. For further details see Andrew Holland's report on the website.

OVERALL TRENDS

Unemployment Rate April 2003 seasonally adjusted 6.1 per cent

GDP December 2002 3.2 per cent

CPI March 2003 3.4 per cent

LIVING WAGE

Living wage adjustment May 2003-06-02 $17.00
Federal Minimum increase 3.4%
Federal Minimum Weekly Wage $448.40

AVERAGE WEEKLY EARNINGS

Full time adult ordinary earnings Feb 2003-06-02 $899.80
% change on previous quarter 1.2
%change over year to Feb 2003-06-02 4.3
AWE, all employees February 2003-06-02 713.40

AVERAGE ANNUALISED WAGE INCREASES

December 2002 Quarter
All Sectors 4.1%
Private Sector 3.9%
Public Sector 4.3%

All industries 4.1%

Education 3.7%
Government Admin 4.5%
Health & Community 3.7%
Finance & Insurance 4.2%

Public Sector Wage Growth

The ABS Wage Cost Index puts public sector wage increases in hourly rates in May 2003 at 4 per cent. The growth in the sector reflects substantial increases in awards and agreements such as education and health and community services. Substantial award increases, particularly for NSW government workers also had a significant effect on the overall increase in the public sector.

Budget Proposals for Higher Education:

The Federal Government announced 1.5 billion dollars to be injected into Higher Education but this comes after a period of Universities suffering a five billion dollar cut. Universities will receive $152 million in 2004 and 403 million in 2005 however the money comes with strings attached. The new proposals change funding arrangements and require that for universities to get funding they must sign an annual agreement with the Commonwealth setting out places and degree mix.

The new funding makes the money available to institutions that actively offer employees to take up individual contracts. This is failed policy from David Kemp's Workplace Reform Program given a new kick start from Brendan Nelson and called the Workplace Productivity Programme. The Programme is to link salary movements to an individual's performance. The Government appears to ignore the fact that this may violate International Labor Organisation and Workplace Relations Act principles of Freedom of Association.

The Government also intends to attack the industrial rights of workers in the university sector by amending the Workplace Relations Act. The amendments will aim at reducing legitimate forms industrial action such as not processing exam results. The Budget and the reform package is an attack on the industrial rights of workers.

The money is also tied to Universities making changes to their Governing Councils. Universities are to act more like businesses. The Government has developed a set of National Governance Protocols for Higher Education Institutions. State Government Education Ministers have previously declined to participate with the Federal Government on this issue. The new Protocols limit membership of governing council to 18 members and stipulates positions must be held by persons with financial and commercial experience.

The Budget goes further down the track of user pays education. The Australian concepts of fairness, merit and equality of access are abandoned and the idea of user pays dominates. The budget allows for the partial de-regulation of fees with universities being able to charge 30 per cent more in HECS courses and a rise in the number of full fee paying students from 25 per cent of places to 50 per cent of place on offer. These proposals will mean that those with the money, or families who can support them will be able to get an education. This will lead to greater inequality in the education system with the older sandstone universities charging more for their courses. There'll be greater division between rich and poor universities. We could also see a widening of wages and conditions of employment between the different institutions as happens in the United States of America. A recent report from the Productivity Commission shows that Australian students already pay more in tuition fees than students in comparable countries such as USA, Canada, New Zealand and Sweden. Recent studies of fee de-regulation in Canada and the UK show sharp increases in fees following de-regulation.

The Government also plans to introduce a new loan scheme for students. The new scheme provides for students to study without paying up-front fees to take up a loan with repayment 3.5 per cent above the CPI. Students could incur debts that would take them decades to repay. The `reform' package also proposes to introduce voluntary student unionism - again this will impact of the delivery of services especially in regional institutions.

The Budget also lifts the income threshold for HECS repayments from $24,365.00 to $30,000.00. But this does happen until 2005. Continuing the current rate until 2005 is a financial imposition on low paid workers.

The Opposition parties have announced that they will oppose many of the so-called reforms in the Senate and the Opposition spokesperson for education, Jenny Macklin has announced that they will push for a Senate Inquiry.

Pay Rise Bad for Business

How often have you heard government and employers say that a pay rise is bad for business - well this is true when it comes to executive pay according to a recent study of executive pay.

A report by Shields, O'Donnell and O'Brien `The Buck Stops Here: Private Sector Executive Remuneration in Australia' prepared for the Labor Council of NSW shows that the link between high executive pay and company performance does not exist! Their study in fact shows that as an executives pay increases the performance of the company deteriorates.

They found that executive remuneration levels grew over the decade 1991-2002 from 22 times average weekly earning to 74 times average weekly earnings. At the same time, executive option packages increased from 6.3 per cent in 1987 to 32.5 per cent of total remuneration in 1998.

As far as organisational performance goes they found that in a range of executive remuneration the most optimal level was 17 to 24 times average weekly earnings, beyond that the performance of companies begins deteriorate.

The authors of the report recommend more stringent disclosure requirement of executive salaries, and end to taxpayer subsidies for executive pay and perks and the creation of a fully independent regulatory body with enforcement powers.

As far as workers and union members go the Report calls into question how an individuals remuneration and performance is measured. It is particularly interesting to our higher education sector members because Federal Minister Nelson wishes individualise wage setting and to link individual performance to pay. The report runs counter to the idea that individual pay setting increases productivity and efficiency.

© 2001 Community & Public Sector Union - State Public Services Federation (CPSU-SPSF) - National Office

http://www.cpsu-spsf.asn.au/campaigns/higher_ed/20030602_138.html
Last Modified: 15 Nov 2005