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The Guardian - AU
The Guardian - AU
Paul Karp

Reserve Bank causing households ‘too much pain’ with rate rises, says union chief Sally McManus

ACTU secretary Sally McManus
ACTU secretary Sally McManus says the RBA’s warnings about wage price spirals are ‘completely wrong’. Photograph: Mick Tsikas/AAP

The head of Australia’s union movement has blasted the Reserve Bank and its governor for a lack of “understanding” that rate rises are causing “too much pain” and low income earners have exhausted savings.

The Australian Council of Trade Unions secretary, Sally McManus, made the comments on Thursday after a ninth interest rate hike – and suggestions more increases will follow – sparked fears monetary policy could be tightened too far, risking recession.

With inflation running at 7.8% McManus signalled the ACTU will press the Albanese government on a number of fronts, saying unions “expect” Labor will back minimum wage rises to keep pace with inflation, and that it would continue to advocate for rises in jobseeker.

McManus said while the ACTU doesn’t advocate for a worker representative on the RBA board, it does want “people that actually understand how the world of work works”, arguing the lack of labour market expertise had caused “missteps”.

McManus said the RBA’s “warnings about wage price spirals … were completely wrong and just showed a fundamentally flawed view or understanding of even the basics of how a wages system works”.

“There’s never a calling out about why is inflation where it is. Of course there are always external circumstances, but there’s also a lot of profit-taking by companies, choosing to put up prices more than they need to recover costs and you can see that because of their profits.

“And there’s never anything said about that.”

Asked about the future of the RBA governor, Phil Lowe, McManus said the aim is to fill the “huge gap” in expertise rather than targeting “the governor himself, whether he stays or goes”.

“In the tone of things he’s been saying … [there is] not understanding that at the lower levels of labour market and our society there is not, any longer if there ever was, some savings that people are running down, people are struggling.”

“We are concerned, very concerned at the direction he indicated they are going to go and dangers for the economy in doing that,” she said, in reference to the RBA’s reference this week to multiple rate hikes this year.

“I’m very concerned that comes from a lack of appreciation of what is happening in parts of society and that’s putting too much pain on people and the effect that might have.”

Asked what sort of minimum wage rise unions will push for in a high-inflation environment, McManus said this was “a very big issue for us”, as the Fair Work Commission’s annual review was the “only lever” to lift wages before multi-employer bargaining laws take effect in June.

“We would expect the government would not want to see people’s real wages go backwards.”

“I don’t believe it is right for the economy or fair that bottom end of the labour market, [people] who spend all their money, that they continue to suffer real wage cuts.”

McManus said the ACTU wants to see “the real value of their wages maintained” after a 5% rise in 2022, which was “not as savage” a real wage cut.

In May, Labor under Anthony Albanese was elected promising to push the FWC for the minimum wage to keep up with inflation.

Albanese has not repeated that commitment in 2023, citing the need to go through cabinet processes first.

The workplace relations minister, Tony Burke, told the National Press Club last week “no‑one ever wants anyone’s wages to go backwards” but it was too early to make a decision as the annual wage review had not begun.

McManus said that aged care workers, whose pay increase will be phased in over two years, “deserve a pay rise” despite the federal government’s “financial constraints”.

Similarly, the ACTU has “not changed” its view in favour of jobseeker increases, she said, citing the low unemployment rate to argue it would cost the government less than in previous years.

On Wednesday, Burke began negotiations with unions and employers for a second major industrial relations bill to fix “loopholes” in the workplace system – including improving conditions in the gig economy and legislating same job same pay in labour hire.

McManus said employers’ complaints about last year’s bill lacking consultation were not “fair or valid” but that unions are content for the government to “step through this carefully” and unions want “to get those laws right as well”.

McManus said it would be “disappointing” if employers used the process to throw up roadblocks.

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