ACTU’s minimum wage claim is unsustainable

“The ACTU’s minimum wage claim in this year’s Annual Wage Review is obviously unsustainable. A minimum wage increase of 6% would be a sure-fire way of destroying jobs, harming businesses, and threatening Australia’s long period of economic growth,” Australian Industry Group Chief Executive, Innes Willox, said today.

“Inflation is currently running at 1.8% per annum, and many businesses are struggling to cope with uncertain demand, intense competition and rising costs of energy. In this environment, the ACTU’s proposed 6% wage increase is obviously unsustainable. An increase of this magnitude would hurt lower paid workers, whose job security would be markedly reduced.

“In formulating its claim, the ACTU has taken no account of the Fair Work Commission’s decision in last year’s Annual Wage Review:

  • On the impact of the ACTU’s proposed wage increase on low paid workers, the Fair Work Commission said:

[104] …… an increase of the size proposed by ACCER and the ACTU, is likely to 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. An increase of the magnitude proposed by ACCER and the ACTU would also carry a substantial risk of reducing the employment opportunities for low-skilled workers, including many young persons, who are looking for work.

[105] Workers at the lower end of the wage distribution (such as those paid the NMW), including those on modern awards who tend to have less skill than other workers, are more vulnerable to disemployment.

  • On the ACTU’s proposal for the setting of a medium-term target for the National Minimum Wage of 60% of median earnings, the Fair Work Commission said:

[44] The range of considerations we are required to take into account calls for the exercise of broad judgment rather than a mechanistic or decision rule approach to wage fixation. It is on this basis that past Review decisions have rejected proposals for the adoption of real wage maintenance; a medium term target for the NMW; and the variation of modern award minimum wages based on trends in market wages.

“Australia already has the second highest national minimum wage in the world, just behind France. Also, most Australian workers are entitled to minimum wage rates much higher than the National Minimum Wage (NMW), through the award system.

“In its submission to be filed this Friday, Ai Group will propose a modest wage increase. Unlike the ACTU’s proposal, the increase that Ai Group will propose would not harm businesses, workers or the Australian economy,” said Mr Willox.

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