Australia must maintain independently set, balanced minimum wages

20 Feb 2018 |

Today’s comments from the federal Opposition underscore the critical importance of maintaining truly independent minimum wage setting through the Fair Work Commission. 

Australians on minimum award wages, people seeking work and the many small businesses that employ them, need assurance that the umpire will remain independent, and the rules for setting minimum wages will remain balanced.  This is a particular concern in light of the ACTU plan to peg minimum wages at 60% of median wages.

Australian Chamber CEO James Pearson said the ACTU’s ‘living wage’ seeks to increase minimum wages by at least 6.5% a year for at least four years “an extraordinary proposition with inflation at 1.9%, unemployment at 5.5%, and wages growth across the community at 2%”.

“The plan would cost the economy around $8 billion, without factoring negative flow-on impacts on jobs, small businesses, and communities (assuming the Commission continues to apply increases proportionately to all award rates).

“Minimum wage increases can only be sustained when the circumstances of small businesses, who make up the majority of those paying award wage increases, are recognised. If small business can’t afford the increase, people start losing their jobs, entry level positions disappear and businesses slow or stop.

“The ACTU plan to effectively remove the independence of the umpire or bind its hands to arbitrarily impose massive minimum wage increases would do just this. Small business needs clarity that the ACTU’s damaging, ideological plan for minimum wages will not be implemented.

“We are also concerned at any suggestion that the criteria the Fair Work Commission’s expert panel use in setting minimum wages could be redrafted to deliver even more influence to unions.

“The independent umpire has consistently increased the purchasing power of minimum wages under the existing rules. Minimum wages have risen in excess of inflation in each of the eight annual wage decisions under the rules Labor established in 2009. Further inflating the cost of creating jobs, particularly the entry level jobs young people rely on, would be a disaster.

“Business needs assurance that the Fair Work Commission will remain free to independently determine annual minimum wage increases in Australia based on a proper balance of considerations.“

(Background:  The Fair Work Commission’s independent expert panel on minimum wages will shortly undertake the 2018 wage review, with initial submissions on 13 March, face to face consultations in May, a decision expected in June and increases to take effect from 1 July.)

Kirk Coningham

Acting Director - Public Affairs & Advocacy

P  |  0417 142 467

E  |  [email protected]

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