Economy to ride low-pay lift amid 5th consecutive above-inflation rise

A fifth consecutive minimum wage rise and planned tax reform is expected to raise living standards.

Industrial Relations Minister Christian Porter. Picture: AAP

Industrial Relations Minister Christian Porter has backed the fifth consecutive above-inflation minimum wage rise awarded to 2.2 million workers, predicting the pay increase combined with proposed tax cuts would lift the living standards of the nation’s low paid.

Rejecting the ACTU claim for a 6 per cent rise and employer ­attempts to keep the increase in line with the inflation rate, the Fair Work Commission lifted the minimum wage by $21.60 a week to $740.80. Mr Porter, who has taken on the industrial relations portfolio on top of his responsibilities as Attorney-General, said that “in substantial part”, the commission decision reflected its “positive ­assessment of the performance and competitiveness of the ­national economy”.

“The real increase in minimum wages … combined with the government’s plan to lower taxes for working families will ease cost of living pressures and lift the living standards of all low-paid workers in Australia,’’ Mr Porter said.

“That’s why the first priority of Labor in the 46th parliament must be to support the Morrison government’s proposed tax cuts.”​​

Commission president Iain Ross said the panel has decided to award a smaller rise than last year’s 3.5 per cent increase because of changes in the economic environment, particularly the recent fall in GDP growth and the drop in ­inflation.

He said that despite the drop in GDP growth, the national economy had performed moderately well and data was indicative of a strong labour market

“We are satisfied that the level of increase we have decided upon will not lead to any adverse inflationary outcome and nor will it have any measurable negative impact on employment,’’ Mr Ross said. “However, such an increase will mean an improvement in real wages for those employees who are reliant on the national minimum wage and modern award minimum wages and an improvement in their living standards.’’

He said relative living standards of minimum-wage and award-reliant employees had ­improved over recent years, ­although some households with these workers had disposable ­incomes less than the poverty line.

Australian Chamber of Commerce and Industry chief executive James Pearson said the increase would cost employers an extra $3.1 billion and business was concerned that the rise would put jobs in danger and risk the viability of some small businesses.

“Australia already has one of the highest minimum wages in the world, and continuously increasing minimum wages by significantly more than inflation has consequences,” Mr Pearson said.

Australian Industry Group chief executive Innes Willox said the panel had accepted Ai Group’s argument for a lower increase given slow economic growth, low inflation and increased tax transfer payments providing a benefit to low-paid households.

But he said Australia’s national minimum wage was the second-highest in the world on an hourly basis, behind only Luxembourg and equal to France, and “well above all other comparable ­countries”.

“The impact of a 3 per cent wage increase on employers should not be underestimated,” Mr Willox said. “The economy has slowed, businesses are struggling to cope with high and rising input costs, especially energy costs. Also, productivity growth is weak. Therefore, it is to be hoped that the Fair Work Commission has struck the right balance.’’

The ACTU said the increase was a “step in the right direction” but fell far short of re-establishing the living wage and ensuring that no worker lived in poverty.

ACTU assistant secretary Liam O’Brien said the increase would leave the minimum wage short of the living wage target: 60 per cent of the median full-time wage.

“This is a welcome pay rise for millions of low-paid workers, especially in the face of further penalty rate cuts in a few weeks,’’ Mr O’Brien said. “We have a long way to go to ensure that the minimum wage is enough for workers to live on and support their families.

“No one in Australia should be living in poverty while working full-time, but we know thousands of people are facing this reality.”

Opposition workplace relations spokesman Brendan O’Connor welcomed the FWC decision, saying it was a repudiation of the Morrison government’s refusal to support a real increase to the minimum wage.

Small Business and Family Enter­prise Ombudsman Kate Carnell said Australia had one of the highest minimum wages in the world. “The increase awarded exceeds inflation and that will impact small businesses, many of which are doing it tough right now,” she said. “But it’s important to respect the independent role of the Fair Work Commission.”

United Voice national secretary Jo-anne Schofield said the increase did not make up “for the years of neglect by an out-of-touch system that doesn’t understand low-paid workers”.

“Fifty-seven cents an hour will not remedy historically low wage growth in the face of real cost of living pressures,’’ she said.

“Added to this, 700,000 hospitality and retail workers are just weeks away from the next 10-­percentage-point penalty rate cut. 57c an hour is cold comfort to those 700,000 workers facing their third annual pay cut.”