Wages Policy and the 1991 National Wage Case: An Economic Perspective

Abstract

The National Wage Case decision of April 1991 has provided a crisis for the implementation of wages policy in Australia. Since 1983 wages policy has been implemented under a process which requires consistency between the principles under which the Industrial Relations Commission determines National Wage Case adjustments, and the elements of successive Commonwealth Government/ACTU Accords. The 1991 decision represents a rejection by the IRC of the thrust of the Government's wages policy as presented in Accord V1. It is argued here that it is the shift in the primary goal of wages policy, from control of inflation to the promotion of allocative and operational efficiency, which has provoked the crisis. Unlike the Government, the IRC was not prepared to abandon control over the aggregate wage outcome in the pursuit of the uncertain productivity benefits of enterprise bargaining.