Labor has called on the Fair Work Commission to ensure low-paid workers are not “rolled back” due to rising rates of inflation, backing a minimum wage increase of at least 5, 1% and ignoring suggestions that this would lead to further inflationary pressure.
Employment Minister Tony Burke said the new Federal Government had not limited its recommendation for wage increases to only minimum-wage workers, saying Labor wanted to see “low-paid” workers more broadly — including vendors, cleaners and care workers. the economy – not suffer effective wage cuts due to inflation.
“We don’t want anyone backing down, but there’s a particular priority right now when it comes to low-wage workers,” Burke told a news conference in Sydney.
Prime Minister Anthony Albanese tweeted on Friday that he had signed the government’s submission to the Fair Work Commission’s minimum wage deliberations on Thursday evening. On Friday afternoon, Burke confirmed that the Labor Party submission made specific reference to the 5.1% inflation figure in stating his position that wages should not “roll back”.
The submission noted “very unusual and challenging economic conditions” in Australia and the 5.1% inflation rate. He also noted that the 2.7% gap between inflation and wage growth meant the average Australian “is experiencing the biggest drop in real wages in 21 years”.
“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,” the document said.
“High and rising inflation and weak wage growth are reducing real wages across the economy and creating pressure on the cost of living for low-paid workers. It is essential to ensure that these workers do not suffer a disproportionate impact from these difficult conditions. »
However, the submission also noted that the government “is not suggesting that, overall, wages should automatically rise in line with inflation”, saying it was referring “specifically to low wages and in the macroeconomic context current”.
Labor’s submission also took aim at comments by the former coalition government on “the importance of low-paid work”. Labor said it had “a different view on the annual pay review compared to the previous government”.
During his press conference, Burke echoed similar sentiments.
“Keeping wages low is no longer a position of the Australian government. We want to make sure wages can move and the first step was taken today,” he said.
The minister dismissed suggestions that such wage hikes would add to inflationary pressures.
“Inflation is not driven by strong wage growth. How do we know? We don’t have strong wage growth,” he said.
“The factors currently putting upward pressure on inflation are not wages. It is not one of those factors. The whole concept that the spiral that can be referred to in the early 1980s does not reflect current economic conditions.
Australian Council of Trade Unions secretary Sally McManus said her move supported the submission, calling it a “huge change”.
“After almost a decade of record wage growth and now real wage cuts, culminating in the current cost of living crisis – we welcome the Albanian government’s submission to the annual wage review supporting a wage increase for workers,” she said.
“It’s a huge change to have a government that accepts there is a problem with wage growth in this country and is prepared to do something about it.”
“Workers’ share of national income is at an all-time high right now while productivity is strong and profits at record highs – we urgently need wage growth for workers and that’s a great first not.”
Meanwhile, the CEO of the Australian Chamber of Commerce and Industry, Andrew McKellar, has warned of “unaffordable wage increases” for small businesses and claimed wages are not falling.
“Overall, employees don’t lag behind when the full compensation they receive from employers is taken into account,” McKellar said.
“Forcing unaffordable wage increases on small businesses will put jobs at risk, not create them. The fact is that in nine of the last 10 years, the panel has raised the minimum wage rate above inflation. Wages have not fallen over the past decade.
He called on the FWC panel to consider “the full compensation that employees receive”, such as bonuses, pensions and allowances, which McKellar said led to total compensation for employees actually exceeding inflation. over the past year.
During the election campaign, Albanese – who had long said that workers should not take an effective pay cut because their wages did not increase with the rate of inflation – was asked at a conference of press if he would support “a rise in wages”. at least 5.1% just to keep up with inflation. Albanese replied, “Absolutely.”
This sparked a furious response from the Coalition, annoyed that he appeared to jot down a specific number by which he wanted the minimum wage to rise.
The government’s submission did not explicitly say it wanted wages to rise by 5.1%, but Burke specifically mentioned the rate of inflation in the Labor Party position which “measured against that, that the low-wage workers are not backing down”.
The submission states that the government expects headline inflation to decline through 2023, due to easing supply chain pressures and oil price spikes, and that “growth in nominal wages should begin to outpace inflation” over this period.
But also noting the Reserve Bank of Australia’s forecast that inflation could hit 6% later this year, the Labor Party said the lowest-paid workers – who “were more likely to be women, employed occasionally and under the age of 30” – need relief.
“Given this, a more substantial increase for low-wage earners would be beneficial in helping to close the gender pay gap,” the submission reads.
“With the growth of [wage price index] Should strengthen over the forecast period, supporting a more substantial increase for low-wage workers will also help maintain the relative standard of living of low-wage earners.