Since we've all got so excited about the weak growth in wages, let me ask you a personal question: How much do you know about how wages are set?
For instance, how many workers are affected by the 3.3 per cent increase in the federal minimum wage, announced by the Fair Work Commission in June?
Some people say the weak wages growth is explained by the efforts to discourage collective bargaining under John Howard's Work Choices and neo-liberalism more generally. Any signs of this?
Wages can be set in different ways. So what are they, and how many workers are affected by each?
These questions are answered by a box on the minimum wage decision in the Reserve Bank's latest statement on monetary policy, issued last week. Many of its figures came from the Australian Bureau of Statistics publication, employee earnings and hours, catalogue number 6306.0, for May 2016.
The bureau finds three main ways of setting the wages of employees: "award only", collective agreements and individual arrangements.
Industrial "awards" are legally enforceable determinations made mainly by the federal Fair Work Commission, which set the minimum pay and conditions for employees in a particular industry or occupation.
They form a safety net for the great majority of employees. Any employer paying less than the minimum wage specified in the relevant award is breaking the law and could be prosecuted.
Every year the commission reviews, and usually increases, the "national minimum wage", which is the lowest amount any adult employee may be paid. In this year's review, the national minimum was increased by 3.3 per cent to $18.29 an hour.
What's less well understood is that, at the same time it adjusts the national minimum wage – the minimum minimum, so to speak – the commission also adjusts all the various minimums for workers in different classifications set out in each of the many industrial awards.
Since 2011, the commission has increased the full set of award minimum wages by the same percentage as its increase in the national minimum wage.
According to the bureau's latest figures, for May last year, about 23 per cent of our 10.1 million employees were totally reliant on the relevant minimum wage set out in their award.
Next on the list of wage-setting methods is the 36 per cent of employees whose wages are set by "collective agreements".
Most of these agreements are "enterprise bargaining agreements" negotiated with employers by a union representing the workers at the enterprise.
Enterprise agreements – which should be registered with the commission – build on the provisions of the employees' award, usually involving wage rates and conditions (such as paid leave) that are more generous than provided for in the award.
That leaves 41 per cent of employees – the largest share – having their wages set by "individual arrangements". But this is a rag-bag group.
It may include some people still on formal "individual contracts" left over from the Work Choices era, and it certainly includes managers and employees in highly paid professions whose wages and conditions have always been set by direct negotiation with the boss.
But there's another, big and interesting group: all those ordinary workers whose "individual arrangement" is that they get the award wage plus $X a week, or plus Y per cent.
This means a lot more workers' pay is protected by the award system than a quick look at the figures would suggest. Similarly, the commission's annual increase in award wage rates has a bigger effect on overall wage growth than you'd think.
So how have the proportions of employees in the three wage-setting categories been changing?
Over the 14 years to the start of 2016, the share of employees covered by collective agreements has fallen by 1.8 percentage points to 36 per cent, while the share of individual agreements has fallen by 0.4 points to 41 per cent, meaning the share of award-only employees has increased by 2.2 points to 23 per cent.
But before you take this as proof that a campaign against collective bargaining has forced more workers back to mere reliance on their award, remember there are other possible explanations.
Changes in the composition of the workforce, for instance. Since most part-time employees are award-only, the slowly increasing proportion of part-time jobs could explain much of the increase in the award-only share.
And remember this: some industries are growing faster than others, but different industries have different degrees of reliance on particular wage-setting methods.
For instance, collective bargaining is most common in public administration (covering 78 per cent of employees), education and training (63 per cent), utilities (60 per cent), and health care (55 per cent). That is, industries dominated by the public sector.
Individual arrangements are most common in professional and technical services (80 per cent), wholesale trade (70 per cent), rental and real estate services (63 per cent), construction (58 per cent) and – get this – manufacturing (55 per cent).
That leaves the award-only method most common in hospitality (43 per cent), admin services (42 per cent) and retailing (34 per cent).
It's true that hourly rates of pay are highest for employees with collective bargaining ($39.60), with individual arrangements next on $38.50, and award-only last on $29.60.
But the gap has been narrowing, with the average hourly rate under collective bargaining growing by 89 per cent in nominal terms over the 16 years to May 2016, while award-only grew by 97 per cent and individual arrangements by 109 per cent.
Again, however, this is likely to be explained more by the changing structure of industries and occupations – for instance, a higher proportion of high-paid managers and professionals in the individual arrangements category – than by campaigning against collective bargaining.
Statistics – especially these broad averages – can be misleading. But ignoring the stats and listening only to anecdotes will leave you with a much more distorted picture of reality.
