Treasurer Josh Frydenberg has told the wages umpire that the “scale of improvement” in the economy should be considered when it decides this year’s minimum wage.
Frydenberg and Industrial Relations Minister Michaelia Cash made the submission to the Fair Work Commission following the Tuesday Federal Budget.
The ministers said the economic growth and strengthening labour market is something that should be considered when it comes time for the Commission to decide how much of a pay rise Australia’s 2.2 million award-reliant workers will receive this year.
The Commission will decide on the new rate in June. Traditionally, the Treasurer won’t give explicit insight into where it believes the new minimum wage should be.
Cash and Frydenberg noted that GDP growth is forecast to hit 1.25 per cent this year, 4.25 per cent in 2022 and 2.5 per cent in 2023 as the recovery gathers pace.
“Given the scale of improvement in economic conditions this update is of particular significance for the panel,” the ministers wrote.
At the time, the Morrison Government said there needed to be a “cautious approach” to the minimum wage, given the “uncertainties in the domestic and international economic outlook”.
Unions, employers split on minimum wage
The Australian Council of Trade Unions (ACTU) is pushing for a 3.5 per cent increase to the minimum wage, which would take it from $19.84 an hour to $20.53 an hour. That would take the minimum wage from $753.80 a week to $780.18.
As it stands, the minimum wage is around 52.7 per cent of the national median wage.
“The projections in the 2021 Budget make it clear that without a real increase in the minimum wage this year, working people will suffer a cut in their spending power and their living standards,” ACTU secretary Sally McManus said in a letter to the Government.
However, the Australian Chamber of Commerce and Ai Group are calling for a smaller 1.1 per cent increase. That would mean any wage rise would be capped at $1.18 a day.
“It is critical that the Fair Work Commission (FWC) takes a very cautious approach in determining the level of any minimum wage increase this year,” Ai Group chief executive Innes Willox said.
“While Australia’s economy has bounced back at a faster and stronger pace than had been anticipated (reflecting the size, speed and success of various economic support measures), the effects of the pandemic and recession are ongoing.”
The Chamber of Commerce has also said the Fair Work Commission should stagger the timing of the pay rises.