One of the highlights of the 2021 enterprise bargaining season in the finance sector is about to kick off as unions prepare to engage with the Reserve Bank of Australia on a new collective agreement.
The final shape of the RBA’s enterprise deal will not only be significant for around 1000 staff employed at the bank but also for the signal it sends to business owners and staff at workplaces across the nation.
The modest pay outcomes of the last round of enterprise bargaining at the RBA in June 2017 created a public relations headache for Governor Philip Lowe who at the time was urging Australian employers to deliver above-inflation pay rises to help stoke a consumption-led economic expansion.
At a speech given at the Australian National University a few weeks before the RBA granted 2 per cent annual pay rises over three years to its own staff, Lowe declared that there was a wages crisis in the local economy.
“The crisis is really in real wage growth,” he said.
In the same address, Lowe ratcheted up the rhetoric saying it would be “a good thing” for workers to demand larger pay rises.
In June 2017, consumer inflation was running close to 2 percent, which meant the RBA’s own workplace agreement was inconsistent with the macroeconomic message its governor was trying to send to Australian businesses and unions at the time.
The pay rises agreed to by the RBA only maintained the real wages of its workforce, instead of improving them.
To be fair to Lowe, the RBA’s ability to accept higher wage outcomes for its staff might have been constrained by federal government policies that capped public sector pay rises at 2 per cent.
That consideration was altogether missed in the media reaction to the 3 year enterprise deal struck with the Finance Sector Union and the AMWU.
Inevitably, commentators homed in on the disconnection between the wages outcomes of RBA staff and Lowe’s public-stated concerns about the direction of real incomes in the wider economy.
Former Gillard government economic adviser Stephen Koukoulas believes the RBA would be cognizant of the symbolic message that its new enterprise deal will send to Australian businesses this year.
“Philip Lowe would be thrilled if Australian workers got wage rises of 3.5 per cent or more across the economy,” he said.
“Here is the RBA’s chance to deliver a meaningful message that other employers can follow.
“Pay rises above inflation at the Reserve Bank should be a simple, transparent decision – it’s the symbolism of the RBA pay deal that matters,” Koukoulas said.
The unions are yet to finalise a log of claims for the new bargaining round but could include a demand for pay increases of more than 4 per cent.
That might be a strategic starting point for the unions given that major banks such as Westpac and NAB have delivered rises of 3 per cent (and more for lower paid workers) in the last 12 months.
The Finance Sector Union last night did not respond to a request from Banking Day to answer questions about the bargaining talks with the RBA, but disclosed on its website on Tuesday that it would be seeking to negotiate an agreement outside of the government framework set for the Commonwealth public service.
In a circular sent to RBA staff this week the union also indicated it would be agitating for pay increases above inflation that took into account productivity contributions of staff working from home and Covid-related salary freezes.
In a recent post on its website, the RBA confirmed that it deferred pay rises for general staff last September.
“Given the difficult circumstances facing the country in the context of the COVID-19 pandemic, the Bank determined that it would not be appropriate to continue with pay increases on the same schedule as previous years in the 2019/20 remuneration review,” the RBA states on its website.
“While conditions of employment at the Bank are determined by the Governor, it was decided that it was appropriate to follow government guidelines regarding remuneration in the public sector during the pandemic.”
Another potential issue for the enterprise talks could be the RBA’s decision to increase the proportion of staff hired on temporary contracts since the last deal was negotiated.
In the 12 months to the end of June last year, the RBA hired 200 new staff, of which 59 per cent were in short term, temporary positions.