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Dump the minimum wage, says public policy think tank

Left: Australians march in a rally in Sydney to raise the minimum wage. Right: ACTU secretary Sally McManus. (Source: AAP, Getty)

Efforts and campaigns to raise the minimum wage reached fever pitch a few months ago, with various individuals, groups, unions, and politicians across the political spectrum calling for a rise – but there is one group that thinks the minimum wage is too high.

In a parliamentary briefing paper, public policy think tank the Institute of Public Affairs (IPA) stated that low-paid, low-skilled work was a source of “dignity” and “financial independence”.

“Australia’s high minimum wage undermines the ability of young people to enter the workforce and experience the dignity of work,” the paper said.

“All work provides dignity, skills, and financial independence. Low-paid work is an important rung toward higher paid work and career success.”

The paper refuted “arguments” that low-paid work exploited workers and left them with little income mobility and said more than half of workers earning under $20.27 an hour transition to higher-paid work in a year.

After five years, only 3 per cent of people remain in low-paid work, with 75 per cent of people moving on to higher-paid work.

An IPA spokesperson said the think tank did “not believe there should be a minimum wage”.

“It is not a policy which is well targeted at alleviating poverty — most who are on the minimum wage are not poor,” the spokesperson told

“And it prevents the lowest skilled from getting a job. Instead governments should explore alternatives such as earned income tax credits.”

‘High’ minimum wage prevents people entering the workforce: IPA

The paper also argued that Australia had the highest minimum wage in the OECD and also a “superannuation and industrial relations system” that created a “significant barrier” to jobseekers.

“The minimum wage keeps many people out of the workforce by prohibiting jobs under the price floor. This has the strongest effect on young people who have the highest rates of underutilisation,” argued IPA.

Taking aim at the government, the think tank said the minimum wage was “above market value” and had therefore led to joblessness, impacting young Aussies in particular.

“The way to ensure wage growth for inexperienced and low-skilled workers is to lower the barriers keeping them out of the workforce where they can gain experience and improve their skills and productivity.”

“Governments should acknowledge the dignity of all work and reduce barriers to employment.”

Union slams proposal

Australian Council of Trade Unions secretary Sally McManus denounced the research as “appalling, dangerous, but predictable” and pointed to the think tank’s Liberal affiliations.

“This group believes that workers should have no rights or protections and our society should be run solely according to the wishes of big business. At the same time, former and current IPA members who are Liberal MPs are also pushing for the removal of unfair dismissal protections,” she said in a statement.

She called on Prime Minister Scott Morrison as well as industrial relations minister Christian Porter to reject suggestions that minimum wages be abolished.

“Should they not do this, it will be clear that they are allowing extreme groups like the IPA to drive their agenda,” McManus said.

The idea that the minimum wage should be scrapped was “fundamentally unfair” and would drive Australia into recession, she argued.

“The only thing keeping wage increases in line with inflation are our minimum wages system and the pay rises won by unions.”

“The IPA see the election of the Morrison Government as their opportunity to once again push their extreme agenda. They have a list of demands which over six years the Coalition Government has been ticking off, but they’re not done.”

“The Morrison Government has given them this soapbox with the announcement of a review of workers’ rights, it is up to them to make clear they will not be entertaining any proposal that makes workers worse off.”

The minimum wage, which is reviewed every year, was raised to $19.49 an hour, which affects around 2.2 million minimum wage workers affected by the decision.

The new minimum wage kicked in on 1 July this year.

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