Labor recommends wage rise for more than 1.3 million Australians

At least 1.3 million Australians could look forward to an inflation-busting pay rise after the federal government went further than expected to recommend a boost to wages for “low-paid” workers rather than just those on the minimum wage.

Workplace Relations Minister Tony Burke devoted Labor’s highly anticipated Fair Work submission to the “heroes of the pandemic” with a push for low-income earners to get an increase matching the 5.1 per cent headline inflation rate following the annual minimum wage review.

Workplace Relations Minister Tony Burke used the submission to differentiate Labor from the previous government, saying “the government policy of low wages as a deliberate design feature ended today”.Credit: Alex Ellinghausen

“This is what it looks like when you have a government that is willing to fight for better wages,” Burke told a press conference in Sydney.

“And the Albanese-Labor government’s support for wages to get moving and to make sure that in particular low wage Australians don’t go backwards started today with this submission.”

The submission, which became an election promise after Anthony Albanese said he “absolutely” supported wages meeting the rate of inflation, recommends the commission ensures that “the real wages of Australia’s low-paid workers do not go backwards.”

“Economic conditions are particularly challenging given inflation is at a 21-year high of 5.1 per cent and is expected to increase further in the near term due to persistent and compounding supply shocks,” it reads.

The six-page document was lodged with the Fair Work Commission on Friday afternoon, saying the “challenging” economic conditions, including the sobering outlook portrayed in the national accounts by Treasurer Jim Chalmers this week, contributed to its decision to call for a wage rise.

The national minimum wage is set at $20.33 an hour and paid to about 180,000 Australians. Fair Work’s decision will also affect more than 2.6 million people on industry awards linked to the outcome of the wage case.

Burke said the government had not limited its recommendation just to those on the minimum wage, instead using the term “low paid” Australians, which the commission defines as people on two-thirds of the median adult full-time hourly earnings.

“We referred to low-paid workers. Who are these people? They’re largely the heroes of the pandemic. They’re the people who both sides of politics made lovely speeches about after the pandemic, but only one side of politics, the Labor government now, was willing to fight for,” he said.

“So we’re talking about people on awards that are close to the minimum wage as well. You will find that for example [with] shop assistants, with cleaners, with a lot of people in the care economy. So low-wage workers is the reference that’s there.

“The government doesn’t want anyone to go backwards but this is at its most acute for low-wage earners. They’re the people most affected by the cost-of-living crisis; they’re also the people with the least capacity to have any assets at all or savings to draw down on.”

Professor Roger Wilkins of Melbourne University’s Institute of Applied Economic and Social Research, said this equated to about 1.3 million Australians.

Impact Economics lead economist Dr Angela Jackson gave a slightly higher estimate of about 1.5 million people, saying those on two-thirds the median income earned about $24 an hour.

Burke used the submission to differentiate Labor from the previous government, saying “the government policy of low wages as a deliberate design feature ended today”.

The submission also noted that a heading in the submission lodged this year by the then-Coalition government – titled The importance of low-paid work – “does not reflect the priorities of this government”.

Andrew McKellar chief executive of the Australian Chamber of Commerce and Industry, said an unaffordable wage increase risked inflicting further pain on small businesses, “and the millions of jobs they sustain and create.”

“Imposing unaffordable wage increases on small businesses will put jobs at risk, not create them,” he said.

The government referenced its bid to close the gender pay gap by saying in the submission that low-paid workers “were more likely to be female, employed on a casual basis and under 30 years of age”.

ACTU secretary Sally McManus said it was a “huge shift to have a government that accepts that there is a problem with wage growth in this country and is willing to do something about it.”

“Workers’ share of national income is at a record low right now while productivity is strong and profits are at record highs. We urgently need wage growth for working people and this is a great first step,” she said.

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