The Australian, June 1, 2018
The Fair Work Commission has awarded a $24.30-a-week increase in the minimum wage in its annual review.
The weekly minimum wage will rise by 3.5 per cent to $719.20. The new hourly rate is $18.93.
The commission rejected the ACTU claims for a record $50-a-week pay rise finding granting the claim would have adverse employment effects.
Most business groups had sought to limit the increase to $12.50 to $13.20 a week, but the restaurant and cafe sector and retailers called for a minimum wage freeze.
The new minimum wage will come into operation on July 1, the same day as the second round of penalty rate cuts in certain industries will apply.
ACTU secretary Sally McManus said the increase was significant as it was the highest percentage increase ever awarded by the commission.
“It is a step forward to a living wage but it’s not a living wage,”’ she said.
Ms McManus said the 3.5 per cent increase equated to $26.71 per week for a hospitality worker or $24.33 for a horticulture worker.
“It will be a welcome reprieve for them but we will continue to fight for the restoration of a living wage that underpins a much fairer collective bargaining system,’’ she said.
Australian Industry Group chief executive Innes Willox said the “excessive” increase had the potential to be a major disincentive to employment.
“It is out of step with wage movements across the economy, with inflation, and with the pressures that many businesses are under,” he said.
“Australia already had the second-highest national minimum wage in the world (just behind France) and today’s decision runs the risk of further harming the competitiveness of Australian businesses.
“While the FWC describes the 3.5 per cent increase it has awarded as “modest”, it is well above inflation and it is not supported by improved productivity.
“For the many thousands of small and medium-sized businesses responsible for the bulk of employment in Australia, a 3.5 per cent increase in the costs of employment is anything but modest.
“Contrary to the suggestion by the commission, there remains a clear risk that these businesses will be less able to afford creating new jobs or to offering their existing employees additional hours.”
As well as the $24.30 per week increase to the national minimum wage, the 3.5 per cent rise equates to a $28.30 increase to the base trade rate and an increase of up to $47 per week to the award rates for professionals.
Workplace Minister Craig Laundy said the commission had delivered a carefully considered and balanced outcome.
Highlighting the commission’s rejection of the ACTU claim, Mr Laundy said the government had always supported a balanced wage increase, contrary to claims by the union movement.
“Our submission stated that any outcome should be consistent with the continuation of recent positive economic developments to support economic growth, job growth and productivity growth,’’ he said.
Mr Laundy said the government was committed to delivering the right economic settings to keep growing the economy and today’s decision was further confirmation its policies were working.
The Australian Chamber of Commerce and Industry said the national minimum wage was now “close to, if not, the highest in the world”.
“This minimum wage increase will intensify pressure on people running small businesses, many of whom are already struggling,” the chamber’s chief executive, James Pearson said.
“Businesses which can’t pass on such significant rises to customers will have to cut hours, cut jobs or both.”
He said the decision, the ninth in a row to award an increase above-inflation, was bad news for 700,000 unemployed and 1.1 million underemployed.
“The simple reality is that the more expensive it is to employ, the less viable a business becomes. The less viable a business becomes, the less likely they are to employ.”
The Australian Retailers Association said the increase would certainly have a negative effect on retailers and could potentially result in job losses.
“The ARA are passionate about maintaining a sustainable wage growth and would like to see retailers given the chance to not only invest in their business, but invest in employment to promote retail as a vibrant career choice for all Australians,” said ARA executive director Russell Zimmerman said.
“Today’s minimum wage increase is well above inflation, putting the brakes on employment and innovation throughout the industry, which is detrimental for the retail sector.”
In its decision, the commission said the wage forecasts in the recent federal budget “appear overly optimistic”, particularly as the RBA expects increases in wages growth to be gradual and the unemployment rate is only expected to decline slightly, to 5.25 per cent by 2019–20.
“The panel noted that while it expects wages growth to pick up over time, this is likely to be a more gradual process than that forecast in the budget,’’ it said.
The commission said that compared with 12 months ago, the economic indicators point “more unequivocally to a healthy national economy and labour market”.
“The prevailing economic circumstances provide an opportunity to improve the relative living standards of the low paid, and to enable them to better meet their needs,’’ it said.
“The real value of the national minimum wage has increased by 5.8 per cent over the last decade, and by 4.3 per cent over the past five years.
“However, this has not resulted in improvements to the actual or relative living standards for many categories of national minimum and award-reliant households due to changes in the tax-transfer system.”
But it said granting the ACTU claim would likely run a “substantial risk of adverse employment effects”.
“Such adverse effects will impact on those groups who are already marginalised in the labour market, with a corresponding impact on the vulnerability of households to poverty due to loss of employment or hours of work,’’ it said.
The commission said an increase of the magnitude proposed by the ACTU “would also carry a substantial risk of reducing the employment opportunities for lowskilled workers, including many young persons, who are looking for work.’
Greens MP Adam Bandt said the decision would “still leave many full-time workers living in poverty”.
“Until we enshrine in law a minimum wage above poverty level, inequality will continue to grow in Australia,’’ he said.