Rising cost of living fuels calls for increase in minimum wage by Fair Work Commission




The Fair Work Commission is facing a challenging decision as it considers whether to increase the minimum wage for Australia’s low-paid workers. Many individuals, like full-time retail assistant managers, share their struggles with maintaining a work/life balance due to their low wages. These comments are being considered as the Fair Work Commission prepares to deliver its annual wage review decision before the middle of the year.

According to employer groups, businesses can only afford a 3.5% rise for the 2.6 million minimum-wage and award-wage workers. The Australian Chamber of Commerce and Industry (ACCI), Master Grocers, and other groups believe this figure is reasonable, given the challenges various sectors face. ACCI, the largest business organization in the country, has submitted that a four per cent wage increase, which includes a 0.5% boost to superannuation, would increase the minimum wage to $841.04 per week.

Andrew McKellar, the CEO of ACCI, asserts that “Business supports a pay increase. But it must be reasonable and responsible.” The Australian Retail Association, on the other hand, has called for a 3.8% increase. Despite a slight ease in the cost of living, inflation remains high. According to the bureau’s monthly indicator, the Australian Bureau of Statistics’ quarterly consumer price index was 7.4% for the year to December 2022 and 6.8% for the year to February 2023.

Unions argue that ACCI and the grocers are seeking a $1500 annual accurate pay cut for a full-time worker on the minimum wage, considering the current inflation figure. The retailers’ proposal would result in a cut of approximately $1350. The Australian Council of Trade Unions (ACTU) advocates for a seven per cent rise, equating to around $57 a week, or $3000 per year, for a full-time worker on the minimum wage. The peak union body argues that this increase would meet the current cost of living.

Last year, employer groups criticized the commission’s decision to award a 5.2% increase to minimum-wage workers and a 4.6% increase to workers on awards, stating that it would put jobs at risk and fuel inflation. Similar arguments are being made this year. The union movement claims that corporate profits drive inflation, as companies benefit from tight supply chains primarily due to the war in Ukraine.

Sally McManus, the ACTU secretary, asserts that businesses are not suffering, stating that “Business has done well during the COVID recovery and inflation period. Corporate profits were up by 18.9% in 2022. Bankruptcies are at record lows. Business can afford this raise.” However, Mr. McKellar warns that a wage blowout would pressure small and family businesses when they can least afford it, particularly in award-reliant sectors such as accommodation, hospitality, retail, administration, arts, and recreation.

The Reserve Bank of Australia said in its latest statement that wage growth is “consistent with the inflation target, provided that productivity picks up,” expecting wage growth to increase in response to the tight labour market and higher inflation. However, the central bank is also alert to the risk of a price-wage spiral due to the economy’s limited spare capacity and historically low unemployment rates. Ms. McManus argues there was no wage-price spiral following last year’s decision and believes employers should not use the same discredited arguments to justify more real wage cuts.

The Labor government’s submission did not include a percentage figure. Still, it recommended that the Fair Work Commission ensures that the real wages of low-paid workers in Australia do not decrease.

About the author, Awais Rasheed

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