The economic foundations of family life are being undermined: rumblings beneath.

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Brian Lawrence.

Chairman of the Australian Catholic Council for Employment Relations from 2007 to 2015.
(February 23, 2011) In support of workers fighting for their rights in Wisconsin, Ohio, and across the country. Hundreds of middle class workers from DC area gathered for a solidarity rally outside the offices of Gov. Scott Walker. - Washington, DC - Photo © 2011 David Sachs / SEIU
DC Rally Supporting WI Workers 22, SEIU, flickr cc.

The Catholic Press of 14 November 1896 reported that the St James’ Glebe Point Debating Society had accepted a challenge from the St Francis’ Literary & Debating Society for a debate at St Francis’ Hall in Paddington on the question “That the condition of the people would be improved by the adoption of the minimum or ‘living’ wage principle”.

It was subsequently reported that the affirmative case was successful. We can be sure that the team from St James’ parish made full use of Pope Leo XIII’s landmark social encyclical Rerum Novarum, which had been published only five years earlier.

Rerum Novarum expounded “the Catholic doctrine on work, the right to property, the principle of collaboration instead of class struggle as the fundamental means for social change, the rights of the weak, the dignity of the poor and the obligations of the rich, the perfecting of justice through charity, on the right to form professional associations” (Compendium of the Social Doctrine of the Church, paragraph 89.)

On the centenary of Rerum Novarum, the Australian Catholic Bishops published a Pastoral Letter in which they highlighted the encyclical’s teaching on wages:

It was his [Pope Leo XIII‘s] view that human society is built upon and around productive human work. When a person is employed to work full-time for wages, the employer, in strict justice, will pay for an honest day‘s work a wage sufficient to enable the worker, even if unskilled, to have the benefits of survival, good health, security and modest comfort. The wage must also allow the worker to provide for the future and acquire the personal property needed for the support of a family. To pressure or trick the worker into taking less is, therefore, unjust. (A Century of Catholic Social Teaching, 1991).

Among other matters, Rerum Novarum stated that the remuneration for work must be determined by the laws of justice and equity. It said that the setting of wages on any other basis, such as by the state of the labour market, would be a clear violation of justice, even if the contract for work had been freely entered into by both parties.

garment factory
Women sewing in shop, Kheel Center, flickr cc.

One of the major changes over the century following Rerum Novarum was the development of social safety nets. These safety nets have supported families through various kinds of family payments and, consequently, reduced the demands made on the wage packet to support workers and their families.

In his 1981 encyclical Laborem Exercens, St John Paul II referred to the need for a wage to support the worker and the worker’s family, a traditional concern of Catholic teaching, but recognised that the social measures which would be available to families would reduce the requirement for the wage to be a family wage. This was consistent with the rise of social security systems that provided a social safety net for families.

The economic foundations of family life require adequate wages and family payments. Yet they are under threat. Wages in many lower and middle income jobs are under pressure from the forces of globalisation and family payments are under pressure from the current state of the Commonwealth Government’s Budget. Both kinds of economic pressures challenge us to find fair and effective responses that will protect and support workers and their families.

It is morally unacceptable to reduce wages and family benefits to below the level that is needed to attain a decent standard of living. A morally acceptable and economically sustainable wages policy depends on a morally acceptable national budget, with the burdens and benefits being shared according to needs and capacities. While our debate about policy choices might be framed in terms of fairness and morality, we should not forget that the debate about wages and the rights of families, and children in particular, is essentially about justice and human rights.

The living wage & human rights  

The concept of a living wage emerged in the late nineteenth century in response to widespread “sweating” and social deprivation. Sweating by low pay and long hours was a serious social problem and a major political issue in industrialising nations. The living wage movement propounded a right to minimum wage laws that would enable the worker and the worker’s family to achieve a decent standard of living and live in dignity.

Right from the very start it was recognised that the minimum wage would have a extra benefit to workers who did not have family responsibilities, but this was accepted because of the need to support families. There was no social security system to provide family support and to reduce reliance on the wage packet.

Minimum wage rates were first set in the Australian colonies prior to Federation. Following the Harvester case in 1907 the living wage principle came to be the general basis upon which an ever increasing number of minimum wages were set throughout Australia.

The living wage was not specifically Catholic in its origin, but it coincided with the principle for wage-setting found in Rerum Novarum. Decades later the living wage came to be the basis of the wages provision in the Universal Declaration of Human Rights in 1948. The Declaration recognises that everyone who works has:

… the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection (Article 23(3)).

The instrument that gives effect to the wages part of the Declaration and a number of the other rights declared in 1948 is the United Nations’ International Covenant on Economic, Social and Cultural Rights, which was adopted by the General Assembly in 1966. The Covenant recognises a universal right to remuneration that provides a “decent living for themselves and their families.” (Article 7(a)). The Covenant and the Convention of the Rights of the Child (1990) contain important provisions concerning the “social protection” referred to in the Declaration. Both have been ratified by Australia.

The Catholic Church was an influential supporter of the articulation of social and economic rights and the framework and language of the Church’ analysis and description of socioeconomic matters embraced the framework and language of human rights over a wide range of matters. In St John XXIII’s encyclical Pacem in Terris (1963) and the Second Vatican Council’s Gaudium et Spes (1965) we see the Church articulating a range of human rights.

Social safety nets

A feature of all advanced economies in the second half of the twentieth century was the development of social safety nets and a range of family payments and/or tax concessions that limited the demands on the wage packet to support workers with family responsibilities. The driving force of these changes may have been social and political, but they had an economic dimension.

The changing relative contributions of the wage packet and the public purse have particular relevance to trade-exposed industries. The wage that is necessary to support a worker with family responsibilities may cause some industries to be uncompetitive in international markets and at home. If part of the cost of family support is transferred from the employer to the community as a whole, through the tax/transfer system, some firms may get a competitive edge in exporting or assistance in withstanding competition from imports. Generally, the connection between wage levels and employment opportunities are contentious, but, to the extent that they are connected, an increase in governmental support is pro-employment.

A decent standard of living for workers with family responsibilities cannot be supplied by wages alone in a contemporary globalised economy.  Families must also be supported by strong social safety nets.

The economic foundations of family life 

There are three important matters that need to be addressed when considering the economic foundations of family life.

  • First, we have to identify those workers (and families) who are the object of the protection of the living wage principle and the human right recognised in the Declaration and the Convention. The reasonable and proportionate application of the principle and right does not require compliance in the unusual cases (such as families with nine children), but it requires application in the ordinary and expected circumstances. In contemporary Australia, reasonable and proportionate response must cover workers with two children, whether in sole parent or couple parent families.
  • Second, we need some measure of what is a decent standard of living by contemporary community standards. This could be a contentious task, but it has to be done. At the least, families need to be protected against poverty. Poverty is a threat to families, both in the ability of men and women to prepare for family life and in their ability to sustain a nurturing environment for their children. Children disadvantaged by poverty are most likely to carry their burdens into adult life and into the lives of their own children.
  • Third, we need to consider the best combination of wage and government support for low paid workers and their families. Yet this has not part of our national discourse in Australia.

There are two matters that will impact on the way in which we work through these issues. The first concerns the level of support to be given to the parent in couple parent families who stays home to care for the children and who, like the children, is dependent on the worker. The guiding principles should be that this care has intrinsic value, that parents should have an effective choice in deciding whether or not one of them stays at home to care for the children and that reasonable financial support should be given to them in recognition of that value and to assist them having an effective choice about what will be in the best interests of their children. The second concerns the relative impact of family policies on sole parent and couple parent families. There is a personal and community interest in supporting stable and supportive couple families, but care has to be taken to ensure that children in sole parent families are not disadvantaged. The guiding principle in regard to direct financial assistance is that, so far as money can do it, the children of couple parent and sole parent families should be treated equally.

Undermining the economic foundations

In Australia and internationally we are seeing a reversal of the trend towards the practical application of human rights. The forces working against social safety nets and fair wage outcomes were discussed by Pope Benedict in Caritas in Veritate in 2009. In a very perceptive commentary on the impact of globalisation on wages levels and the financial support given to workers and their families he said:

From the social point of view, systems of protection and welfare … are finding it hard and could find it even harder in the future to pursue their goals of true social justice in today’s profoundly changed environment. … These processes have led to a downsizing of social security systems as the price to be paid for seeking greater competitive advantage in the global market, with consequent grave danger for the rights of workers, for fundamental human rights and for the solidarity associated with the traditional forms of the social State. Systems of social security can lose the capacity to carry out their task, both in emerging countries and in those that were among the earliest to develop, as well as in poor countries.  (Paragraph 25).

The Australian wages system has failed to maintain the relative value of minimum wages. Over the period January 2004 to January 2015 the National Minimum Wage-dependent family of a couple and two children, one in primary school and the other in secondary, school fell further into poverty: from 3.2% below the poverty line to 10.8% below it, with a poverty gap of $116.76 per week in January 2015.

The threats to social security support described by Pope Benedict came to Australia in the national Budget of May 2014. It was a watershed in Australian public policy on family support because of the proposal to cut family payments by around $100 per week for many families.  A wide raft of measures are still unresolved and held up by the Senate, but various changes have been made to the eligibility for family payments.

The most dramatic of these proposals was passed by the Coalition and Labor on 30 November 2015 with almost no public commentary. The long-standing Family Tax Benefit Part B (FTB B), with its origins going back to the first Commonwealth income tax legislation (Income Tax Assessment Act 1936, section 79), will be discontinued on 1 July 2016 for couple families where one parent stays home to care for their child once the youngest child turns 13. This loss, which will amount to a $3,138.85 per year, or $60.20 per week, will apply to all of these families regardless of income, yet it will leave untouched the FTB B payment to sole parent families. It will mean that a sole parent earning up to $100,000 per year will retain this payment while unemployed couple families will lose the payment.

The stated justification for removing this long-standing payment is that it acts as a disincentive to workforce participation, but the real purpose is to cut Government expenditure so that it can be re-directed to what are seen as more electorally appealing policies. In reality, what is happening is that public policy towards couple parent families is being framed in a way that has the intent and effect of forcing both parents into paid employment and denying them the effective choice to have one of them stay at home to care for their children. Importantly it treats in-home child care, which is usually done by women, as of no value.

The legislation enacted in November 2015 is discriminatory against couple parents and the children who live with both parents; and contrary to human rights enshrined in the International Covenant on Economic, Social and Cultural Rights and the Convention of the Rights of the Child. But even if sole parents were to lose the same payments the changes would be inconsistent with long-established rights and the fair and reasonable treatment of families, many of whom are already living in poverty. There is some way to go in the debate on these aspects. If bad legislation is ever to be reversed, a case based on a violation of human rights is best placed to do it.

Much of the Government’s legislative program to cut family payments is still before the Parliament and what has been quietly pushed through in late November 2015 will be forgotten by commentators; and never known by the population as a whole until the cuts take effect. If these facts were known by the members of the Coalition parties and Labor, who variously trumpet their promotion of “family values” and their support for “working families”, there would be, I suggest, widespread disillusionment to outrage from the suburbs to the bush. To their credit, the Greens opposed the legislation; but for the other three major parties the legislation brought discredit.

The remainder of the Government’s family benefits cuts will be debated in the Senate in early 2016. The Government’s Explanatory Memorandum claims that the cuts to family benefits will save $4.8 billion over the forward estimates. In broad terms, the cuts of $4.8 billion borne by 2.5 million families would amount to an average loss of over $1900 for each family with children in the first three years. And because the cuts would only be fully implemented in the third year, the future losses would be suffered at a greater rate. This is “courageous” legislation for a Government in an election year, especially where the numbers in the Senate (including Labor Senators) seem firmly against it. It may be one of the best issues for Labor’s to campaign, but the fact that Labor has already badly damaged many of its traditional supporters will reveal the hollowness of its expected rhetoric about the protection of families.

Brian Lawrence LLB, MEc, last November represented ACCER in the Senate committee inquiry regarding the family tax benefits legislation and will do so again later in February. He will also prepare and present ACCER’s submissions to this year’s Annual Wage Review, as he has done for more than a decade. He has been involved in the promotion and application of Catholic social teaching on workplace relations and related social and economic issues, especially the setting of minimum wages.

 

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