Minimum wage increase ‘extremely harmful’ says ARA

The Fair Work Commission (FWC) announced on Tuesday that the national minimum wage will increase by $22.20 per week to $18.29 per hour. This is an increase of 3.3 per cent for Australia’s lowest-paid workers.

In a statement the FWC says its decision was influenced by current economic circumstances that “provide an opportunity to improve the relative living standards of the low paid and to enable them to better meet their needs”.

The panel, led by FWC president Justice Ian Ross, also says that consideration of international research on the impact of increases in minimum wages has “fortified our view that modest and regular wage increases do not result in disemployment effects”.

It also acknowledges that the increase “will not lift all award-reliant employees out of poverty, particularly those households with dependent children and a single-wage earner” but says that granting an increase that would immediately lift all full-time workers out of poverty “is likely to have adverse employment effects on those groups who are already marginalised in the labour market, with a corresponding impact on the vulnerability of households to poverty due to loss of employment or hours.”

Industry response: ARA

The Australian Retailers Association (ARA) is concerned the increase will stifle jobs growth within the retail sector, and says in a statement that its proposed increase of 1.2 per cent would have been the best way to preserve employment.

Executive director Russell Zimmerman says retailers are already facing a complex operating environment and this increase will be extremely harmful to the growth and stability of the Australian retail industry.

“[The] minimum wage increase of 3.3 per cent will supress the benefits achieved by the penalty rates reduction, negatively affecting increased trading hours for retailers and further delaying employment growth across the sector,” he says.

“With the inherent weakness in today’s economic climate, along with tax increases about to hit consumers, this upsetting increase will strongly impede on employment growth within the industry.”

Industry response: ACTU

The Australian Council of Trade Unions (ACTU) is also unhappy with the decision, believing the increase is not enough.

In a statement, the union says the decision is “further evidence that the system is broken”.

ACTU secretary Sally McManus says the FWC “made a decision to keep working people in poverty”.

“It is now urgent that Australians’ wages are increased given wage growth in Australia is at a 76-year low, company profits are soaring, Treasury has banked on pay rises of 3.75 per cent, the cost of living is rising and 700,000 people are about to get a penalty rate cut.

“If our current rules can’t deliver a decent pay rise, then they need to change.”

By Ruth Cooper