ALP backdown on radical wage plan

The Australian, February 20, 2018

Bill Shorten’s Labor Party is backing away from a controversial proposal to legislate significant minimum wage rises, instead considering a plan to force the Fair Work Commission to give greater weight to the needs of low-paid workers when awarding minimum wage increases.

Employers warned the new approach, flagged yesterday by opposition workplace relations spokesman Brendan O’Connor, would still cost thousands of jobs.

A Shorten government would consider amending the Fair Work Act to change the factors the commission must take into account when determining annual increases, under the new approach.

The commission currently takes into account the performance and competitiveness of the national economy, including productivity, business competitiveness and viability, inflation and employment growth. It also considers the promotion of social ­inclusion through increased workforce participation, relative living standards and needs of the low-paid, and the principle of equal remuneration for work of equal or comparable value.

Mr O’Connor told The Aus­tralian: “Labor still considers the commission to be essential in setting wages in this country, but given the persistent low wage growth, we are considering whether the independent umpire has sufficient guidance from the parliament to ensure workers get their fair share.”

The Australian Industry Group’s head of national workplace relations policy, Stephen Smith, warned last night against changing the minimum wage ­objective in the Fair Work Act.

“It requires that the Fair Work Commission strike a careful balance between a number of specific factors,’’ Mr Smith said.

“The commission must take into account the needs of low-paid workers as well as economic factors such as employment growth, business viability, competitiveness and inflation.

“It would not be in anyone’s interests for the criteria in the act to be skewed in favour of any one factor. If an unsustainable wage increase is awarded to low-paid workers because the criteria gives inadequate weight to business ­viability and competitiveness, thousands of low-paid workers could lose their jobs as a result.

“It is essential that the commission is not hamstrung when carefully weighing up all of the relevant factors and determining what minimum-wage increase is appropriate.”

On January 30, Mr O’Connor said a Labor government would consider changing the law to peg the minimum wage to a certain proportion of the median wage.

The ACTU has proposed a long-term “living wage” target of 60 per cent of the median wage, up from 54 per cent. The current minimum weekly wage is $695.

In a claim rejected by the Fair Work Commission last year, ­unions estimated that phased-in ­increases totalling $194 a week would be required to achieve a 60 per cent target by 2020.

The Australian Chamber of Commerce and Industry said the cost to employers of delivering the union’s “living wage” claim could be between almost $5 billion and $8bn annually.

Mr O’Connor yesterday moved to distance Labor from the proposal to legislate minimum-wage increases.

“Today, we are looking at the living wage,’’ he told Sky News. “As far as Labor is concerned, the Fair Work Commission will always play a central role in these matters but we need to make sure we have the parameters right. We need to make sure it is doing its job to ensure that workers receive their fair share of growth.”

Asked if Labor was still considering legislating minimum-wage rises or leaving minimum wages to the commission but changing its parameters, Mr O’Connor said Labor was undecided.

“We haven’t decided the best approach but I’m just making it very clear that Labor has always been a strong advocate for an umpire,’’ he said. “It’s certainly my assumption that the Fair Work Commission will continue its role in managing wages, including looking at the living wage or the minimum wage … but we are open to ideas about how do we ensure there is a commensurate benefit to workers, particularly in light of record profits and very good productivity growth.”

Workplace Relations Minister Craig Laundy said the ALP could not be believed, despite the shift in position yesterday. “This backflip by Bill Shorten and Labor should be viewed through the prism of political convenience, nothing more,’’ he said. “It demonstrates just how irresponsible Labor is and how much they cannot be trusted to manage the economy.” He said the “reckless” proposal to legislate minimum-wage increases would become ALP policy because Mr Shorten’s leadership was beholden to ACTU secretary Sally McManus and the unions.

“Like many other recent policy announcements by Labor, it followed a clear pattern. One day Sally McManus announces it, in the next couple of days Brendan O’Connor endorses it, and weeks later it is firmed up by Bill Shorten as Labor Party policy. It is clear who is running Labor’s agenda,’’ he said.

“Bill Shorten’s policies are nothing but populist headline-grabbing slogans … likely to lead to closure of around a million small businesses that have battled to survive in recent years.”