Annual wage increase: Minority report got it right

Today’s Fair Work Commission decision to increase minimum wages by 1.75% in three stages from 1 July will cost Australian businesses more than $1.4 billion and is a dangerous misstep as we attempt to recover from the employment and economic impacts of COVID-19.

ACCI strongly supports the dissenting view of Professor Wooden that “given the current economic circumstances, the requirement to provide an adequate safety net of fair minimum wages should lead the Fair Work Commission to prioritize growth in jobs and hours over a wage increase.”

ACCI CEO James Pearson said putting up the price of jobs “when deflation is a strong possibility in the June quarter is nothing short of an assault on people running small businesses, and people on JobSeeker and on JobKeeper.”

“When it’s time for businesses to move off JobKeeper, we risk there being less jobs because of this decision.

“It defies common sense to yet again increase the highest minimum wage in the OECD.

“It equates to an increase of $13 per minimum wage worker per week, but compound that by the number of employees and weeks per year and the cost is a staggering $1.4 billion to Australian businesses. That money could have been spent on saving jobs or hiring new people.

“In his dissenting report, Professor Wooden made sense when he recommended award minimum rates remain unchanged for 2020-2021.

“The Commission gets the analysis right, but reaches the wrong conclusion, accepting the massive economic and jobs impact of the pandemic and ongoing uncertainty, but failing to then exercise the moderation and caution this requires.

“I acknowledge, though, that the Commission had before it irresponsible proposals arguing for substantial increases, well in excess of inflation, payable in full from July 1. The Commission saw through and comprehensively rejected these misguided calls to deliver an almost record high increase in the face the COVID-19 crisis.

Mr Pearson said today’s decision to delay the rollout of wage increases to hardest hit sectors such as hospitality and tourism was “some consolation for businesses on their knees”.

“At least for the hardest hit sectors, they have some time to try and figure out how they are going to pay for this decision.”