“Today, the Australian Industry Group will argue for a modest wage increase of 2% at the final consultations in the Annual Wage Review. This equates to an increase of about $14.40 per week in the National Minimum Wage and about $16.75 per week at the base trade level,” Ai Group Chief Executive, Innes Willox, said today.
“The Australian economy is clearly slowing this year and looks set to stay there for some time. The Reserve Bank of Australia has slashed its growth forecasts and is widely expected to cut interest rates this year.
“The latest business surveys all indicate deteriorating business conditions. The housing market has turned down and global trade is faltering.
“Businesses are struggling to cope with high and rising input costs, especially energy costs. Also, productivity growth is weak nationally and in industries with mainly low-wage employees.
“Inflation remains weak (currently 1.3 per cent) which means that even a small rise in the minimum wage will deliver a real increase in household spending power.
“In addition, low wage employees have benefited from tax changes introduced in last year’s federal Budget. The Low and Middle Income Tax Offset has increased disposable incomes for many low wage earners. While the impacts vary across low and middle-income groups, the increase in disposable income for a single person earning the current National Minimum Wage of $719.20 a week is 0.63 per cent which equates to a change in pre-tax income of $6 per week which is nearly 1% (0.83 per cent). Ai Group is urging the Fair Work Commission to take this into account, consistent with previous Annual Wage Review decisions which have recognised the relevance of changes to the broader social safety net when determining minimum wage increases.
“These factors all support the view that a modest wage increase of 2% would be in the best interests of employees, businesses and the economy. Now is not the time for risky movements in minimum wages. The minimum wage increases awarded by the Fair Work Commission in the last two Annual Wage Reviews (3.3% and 3.5% respectively) were exceptionally high and out of step with overall wage movements and economic settings. It is essential that the increase awarded by the Panel this year is much more modest.
“In contrast to Ai Group’s sensible and sustainable proposed minimum wage increase, the ACTU’s unsustainable wage claim of 6% would inflict harm on businesses and low paid employees,” Mr Willox said.