Extract from The Guardian
If Australian business want to meet their commitments to sustainable development goals they need to lift employees’ wages
Inequality has been rising for a long time in advanced economies.
As long as this was only a problem for working and middle-class people, very few visionary business leaders were publicly making the case for inclusive prosperity.
But now there are signs that more leaders are beginning to understand something is wrong.
It’s a shame it took the eruptions of democratic politics in 2016 – with Brexit and the election of Donald Trump bringing huge disruption to cherished business projects like the European single market and the US-led Trans-Pacific Partnership – to convince leading figures that inequality is bad. But any progress is welcome.
When even the Commonwealth Bank’s $12m man, Ian Narev, can say “income growth inside and outside Australia remains weak, so people are not feeling better off” and go on to point out this is bad for business and bad for growth – as he did in July – then things are clearly changing.
The first thing egalitarian thinkers should say to business leaders like this is simple: “Welcome on board.”
The second thing is simple too. “Can we talk about your next enterprise agreement?”
This is because businesses who support sustainable development in Australia can make a difference by supporting the sustainable development goals (SDGs) framework in a general way – or they can make a lot of difference by acting on sustainable development in a specific way: paying their workers more.
The international sustainable development framework of goals and targets is comprehensive, which is its strength and its weakness.
If business leaders are looking for good new things to do, they have a big menu to choose from. If they want an excuse to say they’re already doing something, they have a big menu to choose from as well.
So Australian thinkers and advocates have to narrow it down. What are we asking business to do?
The SDGs overwhelmingly are about things that governments need to do. So yes, we can ask business to wrap a plane or light up a building – or sponsor a conference – and this won’t hurt.
But there are goals where private companies actually need to be in the lead, where the most important decisions aren’t going to be made by presidents and prime ministers, they’re going to be made by chairs and chief executives.
The SDG 10 (reducing inequalities) is a leading example. The key point? “By 2030, progressively achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average.”
We cannot lift income growth in the bottom 40% of the population without lifting wages for the people in that group who work. That is impossible.
Now Carlton & United Breweries can do something about that. So can Rio Tinto. So can Transfield. So can big supermarket chains and so can every one of the banks.
They don’t have to coordinate international action – it can start with wages in Australia. They don’t even have to sign up to a communiqué calling on government to do anything. The power is in their hands to get it done.
The report of the Chifley Research Centre’s Inclusive Prosperity Commission released in August this year found that right now, it’s not happening in Australia.
In the 70s and early 80s, wages went up faster than productivity. From the 80s to the end of the century, wages and productivity rose together. But since 2000 there has been significant “decoupling” where wages have failed to keep pace with productivity improvements.
In turn, labour’s share of national income has been declining steadily since the 80s.
The income share of the top 1% has grown in our country about as fast as in the UK and the US, although from a lower starting point. The gender pay gap may have decreased slightly but men still earn 23% more than women on average , 4% to 6% of Australia’s society continues to experience chronic poverty and deprivation, and employment growth is still very weak.
Inequality on this scale can’t be sustained. And without wage growth, no amount of redistribution through tax and transfer payments, or opportunity through investment in education and skills, can make an economy inclusive or a society fair.
There’s a role for government of course. For wages to lift for working people, the rules for negotiation need to be strong, and the voice of those people (principally through trade unions) needs to be strong.
Getting wages going up in line with productivity doesn’t have to be a war. We could work together on that.
But we cannot work together on that without an understanding from business leaders that when wages rise based on productivity, the economy as a whole benefits.
When only 10% of the people benefit if the economy is strong, then only 10% of the people will care if the economy is strong.
• Michael Cooney will be speaking on SDG10 (reduce inequalities) at the SDGA16 conference in Sydney on 29-3o November
As long as this was only a problem for working and middle-class people, very few visionary business leaders were publicly making the case for inclusive prosperity.
But now there are signs that more leaders are beginning to understand something is wrong.
It’s a shame it took the eruptions of democratic politics in 2016 – with Brexit and the election of Donald Trump bringing huge disruption to cherished business projects like the European single market and the US-led Trans-Pacific Partnership – to convince leading figures that inequality is bad. But any progress is welcome.
When even the Commonwealth Bank’s $12m man, Ian Narev, can say “income growth inside and outside Australia remains weak, so people are not feeling better off” and go on to point out this is bad for business and bad for growth – as he did in July – then things are clearly changing.
The first thing egalitarian thinkers should say to business leaders like this is simple: “Welcome on board.”
The second thing is simple too. “Can we talk about your next enterprise agreement?”
This is because businesses who support sustainable development in Australia can make a difference by supporting the sustainable development goals (SDGs) framework in a general way – or they can make a lot of difference by acting on sustainable development in a specific way: paying their workers more.
The international sustainable development framework of goals and targets is comprehensive, which is its strength and its weakness.
If business leaders are looking for good new things to do, they have a big menu to choose from. If they want an excuse to say they’re already doing something, they have a big menu to choose from as well.
So Australian thinkers and advocates have to narrow it down. What are we asking business to do?
The SDGs overwhelmingly are about things that governments need to do. So yes, we can ask business to wrap a plane or light up a building – or sponsor a conference – and this won’t hurt.
But there are goals where private companies actually need to be in the lead, where the most important decisions aren’t going to be made by presidents and prime ministers, they’re going to be made by chairs and chief executives.
The SDG 10 (reducing inequalities) is a leading example. The key point? “By 2030, progressively achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average.”
We cannot lift income growth in the bottom 40% of the population without lifting wages for the people in that group who work. That is impossible.
Now Carlton & United Breweries can do something about that. So can Rio Tinto. So can Transfield. So can big supermarket chains and so can every one of the banks.
They don’t have to coordinate international action – it can start with wages in Australia. They don’t even have to sign up to a communiqué calling on government to do anything. The power is in their hands to get it done.
The report of the Chifley Research Centre’s Inclusive Prosperity Commission released in August this year found that right now, it’s not happening in Australia.
In the 70s and early 80s, wages went up faster than productivity. From the 80s to the end of the century, wages and productivity rose together. But since 2000 there has been significant “decoupling” where wages have failed to keep pace with productivity improvements.
In turn, labour’s share of national income has been declining steadily since the 80s.
The income share of the top 1% has grown in our country about as fast as in the UK and the US, although from a lower starting point. The gender pay gap may have decreased slightly but men still earn 23% more than women on average , 4% to 6% of Australia’s society continues to experience chronic poverty and deprivation, and employment growth is still very weak.
Inequality on this scale can’t be sustained. And without wage growth, no amount of redistribution through tax and transfer payments, or opportunity through investment in education and skills, can make an economy inclusive or a society fair.
There’s a role for government of course. For wages to lift for working people, the rules for negotiation need to be strong, and the voice of those people (principally through trade unions) needs to be strong.
Getting wages going up in line with productivity doesn’t have to be a war. We could work together on that.
But we cannot work together on that without an understanding from business leaders that when wages rise based on productivity, the economy as a whole benefits.
When only 10% of the people benefit if the economy is strong, then only 10% of the people will care if the economy is strong.
• Michael Cooney will be speaking on SDG10 (reduce inequalities) at the SDGA16 conference in Sydney on 29-3o November
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