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Australia overtakes Luxembourg to have highest minimum wage in world

Australia has overtaken Luxembourg to have the highest minimum wage in the world, according to OECD figures | GRAPHIC

Australia has overtaken Luxembourg to have the highest minimum wage in the world.
Australia has overtaken Luxembourg to have the highest minimum wage in the world.

Workers on the minimum wage in Australia officially have more purchasing power than those in any other country in the world, according to OECD figures for 2018 released this week.

Business groups have seized on the statistics to contest union claims that the wage system is leaving low-income earners behind, arguing our high minimum wage is having a negative impact on global competitiveness.

A 3.5 per cent increase to our minimum wage in July 2018 saw Australia move ahead of Luxembourg to claim the highest minimum wage in the world, adjusted for inflation and purchasing power.

The latest OECD analysis does not take into account another 3.0 per cent increase in July 2019, outstripping inflation, which indicates we’re likely to stay on top of the rankings for this year.

In Australian dollar terms, our minimum wage increased from $18.93 per hour in 2018, to $19.49 on July 1 this year.

The 2018 OECD data is adjusted for inflation and purchasing power parities (PPPs) to give a figure of $12.14 USD PPP per hour to enable comparisons with other countries.

App users can tap here for minimum wage graphic

Ai Group Chief Executive Innes Willox said the new data offered further evidence against the Australian Council of Trade Unions’ claim that Australia’s minimum wage system needs to be overhauled to better provide for those on low incomes.

“In fact, a person receiving a minimum wage in Australia could afford to purchase more with that wage than minimum wage employees anywhere else in the world,” Mr Willox said.

“At the same time however, the negative impact on business competitiveness from Australia’s high minimum wage levels does raise the risk that there would be fewer employment opportunities for those out of work and fewer opportunities to make inroads into our high underemployment levels.”

The OECD data compares minimum wages across 32 countries.

Others in the top 10 include Luxembourg with $11.82, France with $11.49, Germany with $10.87, The Netherlands with $10.44, Belgium with $10.38, New Zealand with $10.07, the UK with $9.64, Ireland with $9.62 and Canada with $9.52.

A digital visualisation of OECD minimum wages since 1960 by Ai Group economist Andrew Bridger shows that while the United States had the highest minimum wage in the world during the 1960s and early 1970s, Australia has dominated since the 1980s.

In January the German Wirtschafts-und Sozialwissenschaftliches Institute also ranked Australia as having overtaken Luxembourg to lead the world on minimum wages.

Both the OECD and the WSI reports do not include data for Finland, Sweden, Denmark, Norway, Iceland, Austria, Switzerland and Italy as these countries do not have a general minimum wage, but instead have high-level collective bargaining systems which enable extensive minimum wage protection.

An ACTU spokesman said it was a basic principle of fairness that people working full time should not live in poverty.

“Rises to the minimum wages that have been won by the Australian union movement have played an important role in moderating the negative impacts of what is the lowest sustained period of wage growth since the end of World War II,” the spokesman said.

“This measure does not account for Australia’s relatively lower provision of government services compared to the other countries near the top of the table.

“We will continue to advocate for a fair living wage for working people.”

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Original URL: https://www.theaustralian.com.au/nation/australia-overtakes-luxembourg-to-have-highest-minimum-wage-in-world/news-story/cf4255c6fcbb1f3fcd6ab494b85fb14e