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'Look the word crisis up in a dictionary': Businesses attack union minimum wage rise calls
By Jennifer Duke and Nick Bonyhady
Business groups and economists have slammed unions jostling to secure a higher minimum wage during the coronavirus pandemic as tensions rise over the best way to help workers and revive the economy.
The Australian Council of Trade Unions has continued pushing for a $30-a-week increase to the minimum wage during the pandemic, saying it would help boost spending, while the Greens' economic recovery plan released on Monday doubled down on moves to increase the minimum wage to at least 60 per cent of the median wage.
Peter Strong, of the Council of Small Business Organisations Australia, has criticised unions for continuing to call for a minimum wage increase. Credit: Pat Scala
But with almost 600,000 workers losing their jobs in April, Council of Small Business Organisations Australia chief executive Peter Strong has warned this figure could climb higher if employers are forced to pay more.
Mr Strong said union-driven moves to raise the minimum wage were extraordinary given the country's current economic challenges.
"If there's a push for a pay increase, the message from the unions is they don't want people to have jobs," Mr Strong said.
"If they go look the word crisis up in a dictionary they'll learn something ... If you look out the window you can see people are losing jobs. Come September there will be a lot of people put out of work," he said.
"In a crisis, it's just extraordinary they would be so unaware of what is going on in the world. It's not in the best interest of the country for trade unions to come out and ask for pay rises."
He specifically criticised the ACTU as "removed from the reality of the economy and workplaces".
The minimum wage currently stands at $19.49 an hour.
Australian Tourism Industry Council executive director Simon Westaway said the minimum- wage debate was "not helpful or practical".
"Our small business-dominated sector cannot afford this at present, and our focus is on recovery. A rise in the minimum wage is not on industry’s agenda," Mr Westaway said.
Australian Council of Trade Unions secretary Sally McManus.Credit: AAP
ACTU secretary Sally McManus said the economic recovery from the pandemic shutdown would be driven by domestic spending.
"An increase in the minimum wage represents an injection of direct spending into the economy which will stimulate economic growth and ensure working Australians on minimum incomes can meet their daily needs," Ms McManus said.
However, Mr Strong's views are similar to those held by Industrial Relations Minister Christian Porter who previously said businesses would have to cut jobs to afford minimum wage rises.
Peak national employer association Ai Group, in a submission to the Fair Work Commission in early May, also said the increase proposed by the ACTU was "obviously unsustainable" and "would be a certain way to destroy jobs and businesses during the COVID-19 crisis".
"It would also be a sure way to impede economic recovery after the crisis," the group said, adding it would make a further submission next month to determine what, if any, wage increase would be appropriate.
The National Retailers Association's submission said the "retail industry as a whole is not in a position, in the current socio-economic climate, to sustainably afford an increase to minimum wages".
The Australian Chamber of Commerce and Industry warned that wage increases "could exacerbate the economic downturn, slow the recovery, frustrate efforts to get people back into work, and risk further job losses".
The Greens have called for a Bernie Sanders-inspired jobs guarantee and a permanent increase in the JobSeeker allowance as part of their recovery package, as well as an increase in the minimum wage.
The plan is driven by concerns for young people, whose jobs and potential career paths have been hard hit by the virus. It outlines providing government-backed jobs in areas of renewable energy, aged care, restoring bushfire-affected areas, social housing building, manufacturing, the arts and in education.
Tim Harcourt, an economist who has served on both the sides of the minimum wage process, said he had not expected the ACTU would follow its usual course and put in a claim for a large increase in the minimum wage.
"I'm surprised the ACTU put up the same claim they put up every year. I would have thought they could have put up a COVID-adjusted claim," said Mr Harcourt, who was a research officer at the ACTU before serving on the Fair Work Commission's expert minimum wage setting panel from 2013-2018.
The union typically submits a high initial claim, which has been up to 6 per cent in recent years, in the knowledge the Fair Work Commission usually settles on an amount between that and low employer claims.
While Mr Harcourt acknowledged raising the minimum wage provided stimulus for the macro-economy, he said that in the current economic conditions the ACTU ought to have considered deferred or staggered increases. "It's very different conditions."
But he also said Australia should also learn from the Great Depression, when wage cuts deepened economic hardship. "An actual wage cut would be disastrous," he said.
Griffith University economics professor Tony Makin, a former international consultant economist with the IMF Institute, said any moves to increase the minimum wage would hurt businesses' ability to get back on their feet.
"Business is struggling and the biggest cost for most of them is the wages cost. It'll impede employment going forward," he said.
Former Australian Competition and Consumer Commission chairman Allan Fells also said it was "not ideal timing" to be increasing the minimum wage.
But AlphaBeta director Andrew Charlton, a former economic adviser to ex-prime minister Kevin Rudd, said as a general rule more money in the economy helped with the recovery.
"Putting money into the hands of lower-paid workers is a great way to stimulate the economy. It's positive from a macroeconomic perspective," Mr Charlton said.
"Crises create inequality and the last thing you want to be doing is exacerbating that by restraining wage rises for lower-paid people."