Labor says pay rises should be ‘sustainable and affordable’

Finance Minister Katy Gallagher refused to state whether any increase should be in line with inflation.

Finance Minister Katy Gallagher. Picture: NCA NewsWire / Gary Ramage

The Albanese government has backed low-income workers getting “good” pay rises from this year’s annual wage review but refused to say whether any ­increase should be in line with inflation.

Finance Minister Katy Gallagher said the government was finalising its submission to the Fair Work Commission – due by the end of March – and wanted to make sure low-income workers were getting “sustainable and ­affordable pay rises”.

Union leaders are calling for an inflation-level pay rise of ­potentially 7 per cent for 2.6 million award-reliant workers and a bigger increase for 184,000 minimum wage workers, citing the “biggest cost-of-living crisis in memory”.

They said the federal government should maintain the position Labor took to last year’s wage review that the real wages of the lowest-paid workers should not go backwards.

When Labor made the pledge, the inflation rate was at 5.1 per cent, and the commission awarded a 5.2 per cent to minimum wage workers, and lower rises of 4.6 per cent, up to $40 a week, to workers on award rates.

Recent data shows headline inflation reaching 7.8 per cent in the December quarter, the highest in more than three decades, while the monthly consumer price index rose 7.4 per cent in the year to January, down from the 8.4 per cent rise in December.

On ABC Radio National, Senator Gallagher would not commit the government to again make a submission that the real wages of the lowest-paid workers should not go backwards.

She said the government wanted to make sure low-­income workers were “getting sustainable and affordable pay rises” but she did not expect the government submission, like last year, to nominate a specific figure that minimum rates and award wages should increase.

An inflation-level pay rise for award-reliant workers and a higher increase for those on the minimum wage has been publicly backed by unions including the CFMEU, the United Workers Union, the Australian Manufacturing Workers Union, the Health Services Union and the Electrical Trades Union.

AMWU national secretary Steve Murphy said “at a bare minimum, workers deserve wage rises that meet and beat inflation”, while Transport Workers Union national secretary Michael Kaine said it was important that the wage review ­delivered “real relief” for ­workers from their cost-of-living pressures.

Key business groups will seek to restrict the size of this year’s increase, claiming a successful union push for “unsustainable” pay rises would fuel inflation and result in more interest rate rises.

Ai Group chief executive Innes Willox said businesses would be hit with higher costs for labour and borrowing, resulting in fewer people being employed and fewer hours of work being available.