The Australian Government has warned against increasing the minimum wage in the wake of the COVID-19 downturn, saying small businesses will struggle to meet the increased costs.
However, unions have described this decision as hypocritical as the JobKeeper subsidy comes to an end.
In its submission to the annual minimum wage case, the Morrison Government called for a “cautious approach” to raising the minimum wage, given “uncertainties in the domestic and international economic outlook”.
Around 2.3 million workers have their pay set relative to the minimum wage, which is typically updated each July by the Fair Work Commission. Of those, 180,000 earn the minimum wage.
That’s currently set at $19.84 an hour or $753.80 per week, and makes up around 52.7 per cent of the national median wage.
“The risk of domestic outbreaks and ongoing disruptions to other major economies mean the economic environment remains uncertain,” the submission reads.
“Although the vaccine rollout is underway, COVID-19 outbreaks that would necessitate further containment measures remain a significant risk and even localised outbreaks could have an impact on consumer and business confidence weighing on consumption and investment.”
In its submission, the Government also noted that the Superannuation Guarantee is scheduled to increase by 0.5 percentage points in July.
Unions, social services urge increase
However, the Australian Council of Trade Unions (ACTU) blasted the Government’s stance as hypocritical.
“The hypocrisy of the Federal Government is breathtaking – they say it’s fine to get rid of JobKeeper because the economy is recovering, but workers shouldn’t have a pay rise because the economy is faltering. They can’t have it both ways,” ACTU assistant secretary Scott Connolly said on Tuesday morning.
“Profits are soaring over 8 per cent and the Reserve Bank are calling for wage growth above 3 per cent, but the Federal Government still wants the minimum wage to go backwards in real terms.
“If wages don’t increase it threatens the entire recovery. Money in the hands of working people is what will create sustainable economic growth, not bigger profits for big business.”
The ACTU is calling for a 3.5 per cent increase to the minimum wage, which would take it to $20.53.
The Australian Council of Social Services (ACOSS) has also called for a “substantial increase” to the minimum wage.
In its submission, it said poverty among wage-earning households was trending upwards even before the COVID recessions, with 38 per cent of people living below the poverty line in 2017-18.
“In our view, to sustain growth in consumer demand and employment through this year and the next, stronger growth in wages in the lower half of the pay distribution is needed, along with an adequate, permanent increase in the JobSeeker Payment and higher levels of public expenditure to improve care services and public infrastructure,” ACOSS said.
The Housing Industry Association has called for a deferred commencement of any minimum wage decision, while also calling for caution. The National Retail Association has said any minimum wage increase should be tied to the Consumer Price Index.