(1892), but it lacked power to compel attendance and enforce decisions.
2 Macarthy op.cit. p.l. This judgement was the outcome of the policy
of New Protection, the keynote of which was that excise duties were to be imposed on manufactured goods but exemption would be granted to local manufacturers who paid ’fair and reasonable wages’ in the
judgement of the Commonwealth Arbitration Court. The Sunshine Harvester
Works, an agricultural implements maker, applied for such an exemption. 3 Ibid.
Commonwealth Court, that is, those industries in which there had been
disputes extending beyond state boundaries. And even by 1921, the
Commonwealth Court’s share of total wage prescription was only about 20 per cent;1 thus most decisions were still taken by state institutions and tribunals.2 Nonetheless, Higgins’ Harvester Judgement was of
considerable importance. It brought the concept of a minimum wage
standard before public attention as an ideal to be adopted by Australian
society. It set an example. After the judgement there was a rush for
new wage boards,3 4 and between 1909 and 1912, increasing numbers of
trades and occupations were brought under some system of wage regulation. It also produced greater uniformity in wage regulation:
Up to 1907 state tribunals had gone their own ways, noticing the decisions of other tribunals only in considering the limitations placed on their own
determinations or awards. The next 14 years saw
the gradual application of a standard wage for unskilled work that was not determined by regional
conditions. It was a national standard reflecting
the maturing of a national sentiment. (emphasis in the original)
It seems reasonable to argue then that the growth in institutional arrangements for wage regulation and the increased uniformity of goals, helps to explain the close correlation in wage movements across
industry groups, between states and even between average earnings and minimum rates.
Two questions, however, remain: given the acceptance of a
'living wage’ as a national goal, how was this implemented and varied
over time by State and Federal authorities; and similarly, how were 'secondary wages’ (margins for skill) increased over the years?
State tribunals did not immediately emulate Higgins’ ruling
of 42 shillings per week. This was only achieved gradually in upward
steps.5 Before the war, these steps were basically determined by
economic conditions. Of great concern was that wages should not be
1 Ibid., p.517. The share reached 34 per cent by 1923.
2 Ibid., p.137. 3 Ibid., p.156. 4 Ibid., p.479.
5 It was achieved in real terms by 1921. The pattern of wage prescription
of the states for unskilled work initially moved toward a high degree of uniformity at about 36 shillings, then toward a single rate for labourers
and sub-labourers. Finally, the uniform money rate was progressively
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allowed to rise so rapidly as to generate unemployment Hence as the labour market tightened immediately before the war (1909-12), minimum
rates moved briskly upwards.1 Some concern was also expressed at 'the
erosive effects of inflation on money wages. But it was not until
the war and postwar period that price increases assumed paramount importance in wage determinations.
During the war, increasing emphasis was placed on inflation and its detrimental impact on the standard of living of the Australian worker, and the minimum basic wage was periodically adjusted upwards
in proportion to the increases in the cost of living.2 After the war
this relation was formalised. From 1922, the Commonwealth Court
adopted a system of quarterly adjustments to the basic wage for variations in the cost of living - a system which spread to state
awards. After 1920, price rises levelled off and, as noted above,
growth in the average minimum money wages also levelled out.
What of ’secondary wages'? Although the Harvester Judgement prescribed marginal or 'secondary wages' of various amounts in excess of the basic wage for skill and other classes of work, the main
emphasis was on the basic wage - the lifting of the minimum living
standard. The wage differential between unskilled and skilled
declined through to the war. On the basis of Macarthy's calculations
the ratio of unskilled to skilled was .71 in 1907; thereafter it rose to about .78 (by 1915).3 Other work by Oxnam suggests that differentials continued to narrow during the war (Figure 5).4
During these years the tribunals considered that in a period of crisis, skilled workers could not expect margins to be preserved in real terms5 -
1A priori , we would expect the graphs to reveal a 'rachet-step incline.' However, wage claims for individual groups were spaced out over time -
wage reviews for individual claimants were often 2-3 years apart. This
had the effect of smoothing the rate of incline of aggregate minimum rates. 2 D.W. Oxnam, 'Relation of Unskilled to Skilled Wage Rates in Australia', Economic Record, June 1950, p.116.
3 Macarthy, op.cit., p.175.
11 It is to be noted that Macarthy's estimate for 1915 is slightly higher than Oxnam's (in 1915, Macarthy's ratio is .780, Oxnam's .746).
Macarthy makes no reference to Oxnam's earlier work, but the discrepancy is probably due to the use of different data - the latter uses award
rates, the former award plus non-award. There is nonetheless a close
correspondence in the estimated magnitude of the narrowing of differentials. Over 1915-18, the years for which the estimates of the two researchers
can be compared, Macarthy's differential closes by some four per cent, Oxnam's by about six per cent.
5 Oxnam, p.117; Keith Hancock and Kathryn Moore, 'The Occupational Wage Structure in Australia Since 1914', British Journal of Industrial
Figure 5
Comparison of Average Unskilled and Skilled Weekly Wage Rates for Various Occupations in Melbourne, 1914-30
(Ratio)
1914 19 30
Source: D.W. Oxnam, 'The Relation of Unskilled to Skilled Wage Rates in Australia', Economic R e c o r d , June 1952.
Note: 1914 as at 30th September; other years as at 31st December.
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as already noted, the basic wage was lifted upwards in response to
rising commodity prices. In 1920 and 1921 Higgins tried to set an
example and restore the relation between the ’basic wage’ and prewar
margins. But he resigned during 1921, and in light of depressed
conditions, his successor in the following year withdrew part of the
increases that Higgins had awarded. In the twenties tribunals
generally refused to grant increased margins. With prices fairly
stable, the basic wage moved by small amounts and there were only minor changes in occupational inequalities.
In conclusion, then, legal award rates comprised two components,
the basic or ’living wage' and margins. From 1907, increasing numbers
of occupations, both skilled and unskilled, were covered by some form
of wage regulation. Between 1913 and 1920, the percentage of the
industrial workforce affected by voluntary negotiations with employers (i.e., those outside institutional regulation or conciliation), amounted to 15-20 per cent; by 1921 it amounted to a little over 10 per cent and by 1923 less than two per cent.1 Within the set of legal minima, it was the basic wage - the minimum for unskilled labour - that was most important in wage determinations.
I began this section with the suggestion that it was national wage policy which accounts for the high correlations between legal
awards and average earnings. A final point must be made. In the prewar
period the paramount principle in determinations was economic and
labour market conditions. Heqce wage and earning patterns determined
by legal regulation and under the hypothetical free market may not have
differed greatly. Similarly, while in the twenties the wage principle
adopted was the adjustment of the basic wage in accord with price movements (which flattened out), the labour market was comparatively slack, so again the 'free' market may have generated much the same
results. However, it is improbable that conditions of supply and demand
for labour across submarkets were so similar that the same high degree of uniformity of movements would have prevailed in the absence of wage regulation.
To date, the discussion of wage rates has been solely in money
terms. Below, the impact of price changes on wages over time are
explored.
Macarthy, op.cit., p.187. 1
Price movements and real wages *
Movements in aggregate retail prices in the several states
and the Commonwealth show close correspondence. Table 1 of Appendix 2.A.1
chronicles the data for some states and the Commonwealth, and Figure 6 illustrates the correspondence of movements in Melbourne and Sydney with the Commonwealth aggregate lying systematically between the two
time series. The point estimates shown for 1891, 1895, 1900 are
extrapolations of the Commonwealth Statistician's 'A' series price
1 It was originally my intention to offer a partial explanation of