December 13, 2024

australian wages

Australia’s lowest paid workers get 5.75% increase in minimum wage

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More than 2.75 million workers to benefit, but the increase is still below the inflation rate.

The Fair Work Commission’s annual wage review decision increased minimum wages to $882.80 per week, or $23.23 per hour.

The increase is about midway between the 3.8 per cent called for by business groups and the 7 per cent sought by the ACTU.

Fair Work Commission president, Adam Hatcher, said the previous year’s 5.2 per cent minimum wage increase had affected about one in four workers whose wages made up 11 per cent of the national total, and had not contributed to a wage-price spiral.

ACTU secretary, Sally McManus, said this year’s increase would “really help millions of working people to stay afloat”.

“It is a critical increase during this cost-of-living crisis,” she said.

“As it does every year, big business pushed hard for a cut that would see Australia’s lowest paid workers go backwards by at least $1350 a year.

“We call on the Reserve Bank not to raise interest rates again… as this would obliterate the raise low-paid workers have just gained.”

The employment minister, Tony Burke, welcomed the commission’s decision as “the best decision for workers we’ve ever had”.

He said it was “dreadful” some would interpret the wage increase as elevating the risk of higher interest rates.

ACTU ups minimum wage claim to 5.5%

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The ACTU has revised its minimum wage claim from 5 per cent to 5.5 per cent, to protect the low paid in the midst of an accelerating cost of living crisis.

This increase would lift the hourly rate in the minimum adult wage from $20.33 to $21.45, the weekly rate from $772.60 to $815.09 and the annual rate from $40,175.20 to $42,384.84.

When the ACTU submitted its initial claim on 31 March, the federal budget had predicted inflation would peak at 4.25 per cent in the middle of this year. By May, inflation was already at 5.1 per cent and the RBA is predicting it will reach 5.5 per cent by mid-year.

A pay rise of 5.5 per cent for the one in four workers who rely on the outcome of the minimum wage case aims to ensure that they do not go backwards in real terms, the ACTU said.

ACTU Secretary, Sally McManus, said the claim was designed to break the trend of the deep real wage cuts that she attributed to “Scott Morrison missing in action on wages”.

“A 5.5 per cent increase is what is now needed just to ensure people tread water; anything less has them drowning in bills,” she said.

“People have already cut back discretionary spending; they will have no choice but to cut it completely as for so many workers – cleaners, aged care and retail workers, there is nothing left after the rent, groceries and petrol.”

Pay battles expose Coalition’s contempt for wage justice

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Be it health care in NSW or aged care nationwide, Liberal/National governments are determined to keep wages low.

Liberal/National Party Coalition governments have a mean streak when it comes to fair pay in aged care.

In 2012, the Gillard Labor government committed $1.2 billion to address aged care workforce issues, including specific funding for wage increases.

However, in 2014 the Abbott government abolished the measure, despite warnings from the Aged Care Financing Authority. Instead, it told aged care providers to bring in more temporary migrant workers.

Fast forward to 2022 and another federal Coalition government is displaying a similar contempt for wage justice.

The Fair Work Commission (FWC) is currently considering a union application for a 25 per cent wage increase for aged care workers. Aged care employers have told the FWC they also support a pay rise but haven’t specified how much.

Labor leader Anthony Albanese says his government will also make a submission to the FWC supporting a pay increase if Labor wins the election.

The Morrison government alone refuses to support a permanent pay rise. Instead, it hopes aged care workers will be satisfied with two one-off payments of $400.

This is a rejection of the aged care royal commission’s call for higher wages in the sector last year.

As Labor frontbencher Bill Shorten said, “If Mr Morrison was fair dinkum, he’d turn up at the Fair Work Commission, the independent umpire of wages, and support increasing the base rate per hour. If we don’t do that, we’re going to see a flight of aged care workers into hospo, into retail, into Bunnings, and nothing ever changes.”

In NSW, Scott Morrison’s counterparts in Macquarie Street have shown a similar disregard for wage justice for nurses and midwives.

The NSW Coalition Government gave nurses and midwives an insulting 0.3 per cent increase in the first year of the pandemic and a 1.5 per cent pay rise in 2021.

As NSWNMA General Secretary Brett Holmes said, “Not only is this offer disrespectful of our hardworking members, but it also sends a message to any nurses and midwives entering the public health sector that they are not valued by their employer.”

Such paltry increases also make no economic sense.

A study by the Centre for Future Work at the Australia Institute found that blocking pay rises for essential workers “is not just morally questionable – it’s also a major economic mistake”.

“The motivation for public sector wage austerity seems more ideological than fiscal or economic. Our research shows these arbitrary pay freezes are both unfair and economically counterproductive,” said Dr Jim Stanford, the lead author of the study.

Even the Reserve Bank of Australia says improved wages remain central to any recovery from the pandemic.

For years, the Reserve Bank governor, Philip Lowe, has said wages growth in Australia needs to “have a three in front of it” for spending to pick up and our economy to prosper.

Dr Andrew Charlton, a key economic adviser for the Rudd government when it crafted its stimulus package in response to the Global Financial Crisis, said keeping wages low is “precisely the opposite direction economic policy needs to be headed to achieve the government’s goal of supporting economic recovery.”

Where the parties stand on WAGES

Labor promises to:

make a submission to the Fair Work Commission supporting a pay increase for aged care workers if it wins government

legislate to criminalise wage theft – the deliberate underpayment or non-payment of wages, which disproportionately impacts young people, women, overseas students and migrant workers. A 2019 report estimated the underpayment of Australian workers’ entitlements at $1.35 billion per year including $220 million in “healthcare and social assistance”

ensure that workers employed through labour hire companies receive no less than workers employed directly.

The Greens support:

raising the minimum wage to at least 60 per cent of the full-time adult median wage so workers can afford to meet their basic needs

giving workers the right to engage in industrial action, including the right to strike, consistent with international law and not limited to artificially restricted bargaining periods

giving workers the right to engage in collective bargaining on any matter relevant to their social, economic and environmental interests.

Coalition:

The Coalition government imposed a 12-month pay freeze on federal government employees in 2020.

Its latest wage policy is to ensure that Commonwealth public sector wage rises do not exceed wage rises in the private sector.

The Liberal and National parties promise to continue “tackling union lawlessness and thuggery”.

Wages go backwards as corporate profits surge: ABS data 

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Australian workers are worse off under the Morrison Government, despite growth in both the Gross Domestic Product (GDP) and corporate profits in the December quarter of last year, according to data released by the Australian Bureau of Statistics (ABS) today.    

Australian wages went backwards in real terms across 2021, with inflation growing at 3.5 percent, while wages only grew by 2.3 percent. 

As such, Australian workers have experienced the biggest cut in their wages for over 20 years. A worker on an average income of $68,000 saw their pay shrink in real terms, by $832 last year.   

In contrast, the GDP grew by 3.4 percent. Corporate profits also surged by 13 percent in the same period.  

Sally McManus, Secretary of Australian Unions, urged the Morrison Government to act on this wage stagnation crisis.  

“These figures will be little comfort to working people who saw their wages go backwards in real terms,” McManus said.  

“Workers need a fair share of the national prosperity they are creating. We need wage growth to put money in the hands of working people and create a strong, durable recovery from the pandemic.” 

Unions across the country, including the NSW Nurses and Midwives’ Association, are currently fighting for fair wage growth, including above inflation wage rises.  

Australian workers cop worst pay cut in 20 years 

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Wages in Australia are going backwards in real terms, according to recent statistics released by the Australian Bureau of Statistics (ABS). 

Inflation for the year of 2021 was 3.5%, while wages only increased on average by 2.3% over the same period of time – meaning working Australians on the average income of $68,000 received a pay cut of $832 last year. 

The Australian Council of Trade Unions’ Sally McManus described this as “the worst pay cuts workers have faced in over 20 years in real terms”. 

“The recovery from the pandemic relies on real wage growth so that working people can keep up with the rising cost of living. Instead, the Morrison Government has delivered a pay cut,” she said. 

McManus called on the Morrison Government to work with unions to increase wage growth across the county. 

“The Prime Minister should be working with unions to create wage growth and more secure jobs, rather than attacking frontline workers in an attempt to save his job. 

The Reserve Bank of Australia is predicting that inflation will continue to outstrip wages until at least the middle of this year. 

 

Nobel prize won for showing increase in the minimum wage doesn’t cost jobs

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Groundbreaking study on the minimum wage that has reshaped the field of economics.

The Nobel Prize for Economics this year has been awarded to an economist for a study that revolutionised thinking about the minimum wage and the way economics should be studied.

David Card, with his associate Alan Krueger, found that an increase in the minimum wage did not kill jobs. The research was a bombshell for the economic world, challenging an orthodoxy that had dominated the field for decades.

Before their study it was accepted that “everyone knew” that increasing the minimum wage would cost jobs, as employers wouldn’t have the money to keep on as many staff.

Card and Krueger conducted an innovative “natural experiment”, which was based on real life rather than the purely theoretical framework that had been done previously.

In 1992, the US state of New Jersey increased its minimum wage to be the highest in the US. The neighbouring state of Pennsylvania did not.

Card and Krueger surveyed 400 outlets on either side of the border, to see if there were any changes to the number of workers employed in the cities that only differed in what they had done to the minimum wage.

They emphatically found that the rise in the minimum wage had not cost jobs.

Their work has since been supported by the International Monetary Fund and the OECD. It has been cited in judgments of Australia’s Fair Work Commission in their minimum wage decisions.

Prof. Card’s alma mater, University of California, Berkeley, said he had “challenged orthodoxy and dramatically shifted understanding of inequality and the social and economic forces that impact low-wage workers”.

Card also conducted research with similar “real life” methodology, which found immigration did not reduce native-born workers’ wages. In a 1990 study he analysed what happened to the labour market in Miami after 1980, when there was a large influx of immigrants from Cuba.

The arrival of the immigrants – known as the Mariel boat-lift – “had virtually no effect on the wage rates of less-skilled, non-Cuban workers”.

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