FWC minimum wage decision is tempting fate

“The quantum of the minimum wage increase awarded today by the Fair Work Commission decision is tempting fate given the uncertainties and fragilities associated with the economic recovery,” Innes Willox, Chief Executive of the national employer association Ai Group said today.

“A 2.5% increase is too much in the current environment, particularly when employers are also faced with a 0.5 percentage point increase in the Superannuation Guarantee on 1 July and low paid employees have benefitted from personal income tax changes equivalent to a 1.6% increase in pre-tax income. When these factors are taken into account, the remuneration increase totals 4.6% for an employee on the National Minimum Wage.

“A 2.5% minimum wage increase is unwarranted when the latest inflation figure is 1.1% and with wages across the economy only rising at an average rate of 1.5 percent.

“On a purchasing power parity basis, Australia has the highest national minimum wage in the world. The increase will put even more distance between Australia’s national minimum wage and minimum wages in other countries.

“The decision sends a very bad signal and is likely to impact adversely on the recovery. At the current stage of the recovery, the focus needs to be on boosting employment. The decision will create a real risk that jobs growth and inroads into unemployment and underemployment will slow considerably.

“There remain many hurdles to a complete recovery. The global pandemic is continuing and the level of infections in many countries is increasing rapidly. Major travel restrictions are set to remain in place in Australia for at least the next 12 months and are putting a severe restraint on growth prospects.

“The many thousands of businesses that are struggling will find today’s decision very hard to fathom,” Mr Willox said.

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