Labor seeks two-tier wage rise trade-off

Labor is considering a policy to lift full-time workers out of poverty while mitigating wage increase impacts on the economy.

Opposition workplace relations spokesman Brendan O’Connor said Labor would urge the commission this year to award a “fair and economically responsible real increase” to wages. Picture: AAP

Hundreds of thousands of low-paid workers on the national minimum wage could get significant pay rises, with higher-paid award-reliant workers getting smaller above-inflation wage increases, under a proposal being examined by federal Labor.

The Weekend Australian can reveal the Labor opposition is considering a policy to lift all full-time workers out of poverty while mitigating the impact of minimum wage increases on business and the economy.

Currently, several hundred thousand workers are on the nat­ional hourly minimum wage of $18.93 or an equivalent rate, but the annual minimum wage decision by the Fair Work Commission flows through at higher rates to an estimated 2.3 million workers.

Under a proposal being examined by Labor, a Shorten government would urge the commission to essentially take a two-tiered approach: award higher pay rises to workers on the lowest rate and smaller, above-inflation increases to those on higher award rates.

Opposition sources said this would address union concerns about full-time workers being in poverty while reassuring employers the approach would not have a detrimental economic impact.

The sources stressed that the detail — dollar amounts, percentage increases, timing — would be left for the commission to determine. They also said the policy was not locked in and might not be supported.

Opposition workplace relations spokesman Brendan O’Connor said Labor would urge the commission this year to award a “fair and economically responsible real increase”, and refused to nominate a desired dollar-amount increase.

In its submission, the government said it supported a “fair ­increase” in the minimum wage.

Labor is devising a policy that will change the factors that the commission has to weigh up when determining the minimum wage. The commission now takes into account the performance and competitiveness of the economy, including productivity, business competitiveness and viability, inflation and employment growth. It also considers relative living standards and needs of the low-paid, the promotion of social inclusion through increased work­force participation, and the principle of equal remuneration for work of equal or comparable value.

In a clear signal of what Labor’s proposed criteria would include, its submission says the commission should recognise that no Australian working full-time should be living in poverty.

In last year’s annual wage review, the commission said the $24.30-a-week rise granted in 2018 would not lift all national minimum wage and award-­reliant employees out of poverty.

It said that to grant an increase of the size necessary to immediately lift all full-time workers out of poverty was likely to run “a substantial risk of adverse employment effects”.

Australian Industry Group chief executive Innes Willox said any suggestion the commission was not giving enough weight to the needs of low-paid workers was not supported by facts.

“There is no point in having an independent tribunal to determine wages and working conditions if parliament is going to dictate what decisions the tribunal must make or is going to impose unbalanced criteria to ensure the tribunal’s decisions favour one party over another.

“Since the Fair Work Act came into operation, the commission has always awarded the same percentage increase to the national minimum wage and award wages. It has consistently rejected proposals for a higher minimum wage increase to apply to the nat­ional minimum wage than higher wage levels,’’ he said.

John Frydenberg said the key to lifting wages was a strong economy, greater competition for lab­our and higher productivity.

The Treasurer said Labor’s claims about wages were “nothing more than a confused stunt”.

“First, they said they would change everything, then they said they will keep things the way they are and ‘encourage’ the Fair Work Commission. Now they say there’s more to come, but they won’t say what or when,’’ he said.