The federal government asked the Fair Work Commission to ensure that the wages of low-income workers do not fall, in its brief on a possible increase in the minimum wage.
The government delivered its submission to the commission on Friday afternoon, as the body considers whether the minimum wage should rise above the current level of $20.33 an hour.
Following rising levels of inflation, the highest in two decades, Employment Minister Tony Burke said the government was ready to fight for better wages for workers.
“Keeping wages low is no longer an Australian government position, we want to make sure wages can move, and the first step was taken today,” Burke said in Sydney.
Millions of Australians are set to see their biggest pay rise in years as soaring inflation raises the cost of living. Pictured: Sydney trades
Anthony Albanese’s government supported raising the minimum wage by 5.1%
“We have made it clear to the Fair Work Commission in its annual age review that the government’s position is that we don’t want low-wage workers to fall behind.”
Although the submission did not include a figure on how much the minimum wage should rise, the government argued that wages should not fall, following the rise in the consumer price index to 5.1 %.
The government’s submission said: “In reviewing its decision on wages for this year, the government recommends that the Fair Work Commission ensure that the real wages of low-paid Australian workers do not decline.”
Prime Minister Anthony Albanese said during the election campaign that he would “absolutely” support a 5.1% increase in the minimum wage.
Mr Burke said the submission was not limited to those on minimum wage, also referring to low-wage workers.
Who is affected by the salary increases?
National minimum wage workers: Around 235,000 Australian employees not covered by an award receive the national minimum wage of $20.33.
Workers covered by the grants: Some 2.7 million employees have their compensation determined by more than 100 industry awards.
Industries awarded include fast food, hospitality, manufacturing, retail, utilities, plumbing, journalism, coal mining and many more.
Workers earning the minimum grant rate will benefit directly, while others paid above the minimum rate may benefit from ripple effects.
Workers covered by collective agreements: Around 4.7 million workers are covered by a collective agreement with their employer.
These workers are not directly affected by the wage review, but their unions may be able to successfully advocate for a wage increase.
Individual agreement workers: About five million workers benefit from individual agreements. Again, they will not be directly affected but may benefit if they ask for a raise.
“They are largely the heroes of the pandemic… We are also talking about people receiving rewards close to minimum wage,” he said.
“We don’t want anyone backing down, but there is a particular priority right now when it comes to low-wage workers.”
The other authorities will have until Wednesday to file a brief in response to the government’s position.
What Minimum Wage Workers Get Now
National minimum wage workers earn $20.33 an hour or $772.60 a week
This equates to $40,175 per year
Whether unions as they please, the hourly wage would increase by 5.5% to reach $21.45 or $815.10 per week, or $42,385 per year
If the Australian Industry Group gets its way, the hourly wage would increase by 2.5% to $20.84 or $792 per week, or $41,184 per year
The Australian Council of Trade Unions called for a 5.5 per cent increase in the minimum wage in its submission to the Fair Work Commission.
The commission is expected to make its final decision before the end of the month.
ANZ The bank expects the Fair Work Commission to increase the national minimum wage and award minimum wages of 4 to 4.5%.
It would be the biggest increase since 2010, significantly more than the 2.5% rise reported last year, and comes after headline annual inflation hit 5.1% in the March quarter.
The increase will affect around 2.7 million Australians who either receive the national minimum wage of $20.33 an hour or their wages are set by awards for their industry.
Any pay rise below inflation would effectively mean a pay cut for Australia’s lowest paid as they battle the rising cost of living.
The Reserve Bank of Australia estimates that up to 40% of employees – around five million people – could be directly or indirectly affected by the pay review.
Professor John Buchanan, a labor market expert at the University of Sydney, believes a significant rise will have ripple effects by raising community expectations for a pay rise.
“Wages are shaped by the power of workers over their employers and notions of the community standard and what is acceptable. So that (the increase) will shape that standard,’ he told Daily Mail Australia.
“It will have a huge impact for those who depend on the rewards.
“For the bulk of workers paid above the grant rate, the flow effects are muted, but it will have an effect, there’s no doubt about it,” he added.
Wage growth in Australia has been modest for years, with the average increase in the national minimum wage standing at 3.1% between 2010 and 2019.
Prof Buchanan said a bigger-than-usual increase would send a signal to employees across the country.
“Over the past 10 years, this standard has mitigated the impact of wage movements,” he said.
“It will change the community standard if it (the Fair Work Commission) picks it up.
“It will depend on the power of the employees, but it will increase the pressure on the system.
“The impact won’t be labor market-wide, but it won’t be negligible.”
If the unions have their way, hourly wages would increase by 5.5% to $21.45 or $815.10 per week, or $42,385 per year.
Wage growth in Australia has been modest for years, with the average increase in the national minimum wage standing at 3.1% between 2010 and 2019. Pictured: A Sydney cafe
However, Professor Buchanan said the best way to increase your salary is to change companies.
“The biggest impact on salary increases comes from changing jobs,” he said.
The industries with the highest proportion of scholarship-dependent workers are accommodation and food services, administrative and support services, health and social services, and retail trade.
The sectors where the proportion of workers under collective agreements is the highest are the civil service, education, public services and transport.
Almost one in four workers, or 23 percent of workers, is covered by an industry award, 35.1 percent have a collective agreement with their bosses and 37.8 percent are on individual agreements, Australian Bureau of Statistics the data showed.
The industries with the highest proportion of reward-dependent workers are accommodation and food services, administrative and support services, health and social services, and retail trade.
Businesses say they cannot afford a 5.5% increase in payroll while recovering from pandemic shutdowns and dealing with soaring procurement costs.
There are also fears that if wages rise too much, the costs will be passed on to consumers, leading to a wage-price spiral that further fuels inflation.
A decision is expected in mid-June to come into force on July 1.