As it happened… a look at wages growth in 20th century Australia

The rise and rise of wages over the decades is in the fabric of our history.

But cutting wages? It happened! At the hands of the Arbitration Commission, wages were slashed and unions were compelled to take a few belly-blows.

In 1921, Australia’s wage earners were granted pay rises every three months – quarterly wage indexation. And Mr Justice Powers granted workers an extra three bob to compensate for the lag between the time of price rises and adjustments to wages.

Basic wage earners were paid £4/0/6 in 1922, after three years of unemployment following World War I.

Quarterly pay rises kept coming for workers for seven prospering years. In 1929, the basic wage was £4/6/0. But the clover was about to be cut.

In came the rumblings of the Great Depression. Consumers could no longer afford to pay for goods. Prices came tumbling down, dragging wages and job opportunities with them. 

But market forces didn’t drag wages down enough for employers and they applied to the Arbitration Commission to slash wages.

The commission obliged, cutting all wages, including the basic wage. Junior bank clerks who were getting £75 a year found their pay packets containing only £67/10/0.

The next year and the year after that, unions sought to have the 1931 wage rate restored. Both times, it was rejected.

Finally, in 1934, the Commission ruled that wages could again be increased and bumped-up the national wage by eight pence.

But the wheel turned again and on August 5, 1952, employers applied to the Commission to suspend automatic wage adjustments. The hearing turned out to be an eventful, historic session for Australia’s wages judges.

Chief Judge, Sir Raymond Kelly, lorded over five senior judges in Melbourne and they trooped in and out of the courtroom for a solid nine months, but were still unfinished.

Then Mr Justice Foster begged-off due to his regular workload overseeing maritime industrial relations. The other judges ruled that they could not go on without him, having heard so much evidence and submissions as a Full Bench.

Employers stormed off to the High Court. The High Court agreed with them and ruled that the Commission could proceed and in 1953, they did.

During 93 sitting days over 12 months – another drama. Mr Justice McIntyre was taken from the hearing for treatment of a rare blood disease. He died 10 days after the hearing finished.

In 1953, in the dying months of the employers’ bid to kill costly wage indexation, they produced figures to support their case. In eight years, Australia’s hourly wage rate had jumped by 149 per cent. In the US, the rate had risen only 71 per cent and in the UK only 59 per cent.

On September 11, 1953, the exhaustive Commission hearing finally ended. Next day, the eminent judges announced the end of wage indexation.

On April 30, 1975, as a reporter in Melbourne, I watched as a Full Bench of the Arbitration Commission reintroduced quarterly national wage reviews to compensate for price increases, reflect increased productivity and for work value changes and special circumstances. 

Policies of the Fraser and Hawke Governments between 1975 and 1983 were designed to regulate wages and reduce strike levels by enhancing the power of centralised wage-fixing institutions.

After a successful six-year run, wage indexation broke down in July 1981.