There is growing pressure for the Government to throw its support behind higher wages for some of Australia's lowest paid workers amid rising inflation.
On Thursday, Prime Minister Scott Morrison dodged a "simple question" after some of the country's biggest employers said the minimum wage needed to rise in order to catch up with increased cost of living pressures.
"The irony is that the government always predicts there will be wage rises in the budget but then it doesn't actually make a strong recommendation for higher wages to the people actually making those decisions," economist Richard Denniss from the Australian Institute told Yahoo Finance.
On Thursday, Morrison was questioned whether his government would endorse a rise in the minimum wage with the Fair Work Commission.
"I don't believe I have a magic pen that makes wages go up or prices go down," he told reporters.
"We have always taken the same position when it comes to the decisions of the Fair Work Commission. They make their decisions based on the best information they have."
It is the norm for the Fair Work Commission to decide on the minimum wage level each year, Denniss said.
"What the Government's view is and what the Treasury's view is, is really important," he said.
"For the Government to remain strategically silent, I think is economically unhelpful."
Retail giants back minimum wage rise
Earlier this week, Woolworths boss Brad Banducci threw his support behind higher pay after the Australian Retailers Association called for an increase in the minimum wage in line with the underlying rate of inflation.
"We’re very clear that while we need to deliver value for our customers, we also need to make sure that our team can have salaries and wages that keep pace with the underlying increase in the cost of living," he said.
A similar statement was made by Rob Scott of Westfarmers who oversees the operations of retailers including Bunnings, Kmart and Target.
"I see real wage growth as a very good thing. Real wage growth is a good thing for the economy, and if it’s good for the economy, it’s generally good for Wesfarmers," he told the Macquarie Australia Conference.
Combined, Woolworths Group and Westfarmers employ more than 300,000 Australians.
Inflation, as measured by the Consumer Price Index (CPI), hit 5.1 per cent in April, meaning many of those workers would need an equivalent pay rise just to keep from going backwards.
Since July 2021, the National Minimum Wage is $20.33 per hour or $772.60 per week. A raise in line with current inflation would amount to more than $2,000 a year in extra pay.
Wage rise can come from profits, rather than higher prices
Economist Richard Denniss said workers really needed to see wages rising higher than inflation.
"I think they [retail CEOs] are being quite cheeky. Because they're actually saying there should be no increase in real wages (after inflation is taken into account)," he told Yahoo.
"They got a warm round of applause for a pretty tepid position on wages."
Denniss points to the fact that Australian corporations have seen a surge in "profit share of GDP to a record high".
"If we increase wages at the moment, that doesn't all have to be passed on as higher prices, it can be absorbed with slightly lower profits, and we'd still have very high profits."
He believes Australians – and the economy – would be better off if workers got a fairer share.
"If we're going to have rising profit share of GDP than we're not going to have rising real wages. Someone has to miss out and presumably that's why Scott Morrison doesn't want to make a submission or answer a simple question.
"He doesn't want to admit what his priority is."
Each financial year, an expert panel at the Fair Work Commission conducts the annual wage review which takes place from March to June.