Boosting the wages of the lowest paid makes sound economic sense says the ACTU.
Amuch higher national minimum wage is critical if the unacceptable levels of inequality now found in Australia are to be reversed, finds an ACTU report.
The ACTU says wage stagnation, cuts to penalty rates, the casualisation of work and the rapid growth in inequality means day-to-day life has got a lot harder for working families.
“It was once possible for working class families to have a decent but modest lifestyle and still meet the mortgage. This is no longer the case,” it says.
In the report – Living Up to the Promise of Harvester – the ACTU argues for a change in the rules that would allow low-paid workers to receive an income that would cover the reasonable needs of an average sized family.
“This must include the cost of: rent in a suitable dwelling; a balanced and healthy diet; a good quality education; childcare and all health needs; transport; electricity and other energy costs; adequate clothing; an allowance for entertainment; and a contingency for unexpected expenses,” it says.
Minimum wage has no impact on jobs
Australia’s minimum wage has been going backwards in comparison to other developed countries for decades.
In Britain the minimum wage has increased in real value by 33.1 per cent since 1999. Over the same period the Australian minimum wage has increased by 7 per cent in real terms.
During that period the Fair Work Commission has consistently accepted the employers’ assertion that increasing the minimum wage would lead to a loss of jobs.
The ACTU report contests this argument. It says the “evidence for the last two decades across a very broad range of countries have confirmed … findings that increases in the minimum wage do not have a negative impact on employment”.
Even many conservative economists are changing their minds about minimum wages, it says.
The Economist, the bible of conservative economics, had opposed the introduction of a nationwide minimum wage in Britain in 1999 on the grounds that it would cost jobs. Recently the editors of The Economist said: “No-one who has studied the effects of Britain’s minimum wage now thinks it has raised unemployment”.
Based on hard evidence the magazine admitted it had “changed its mind”.
In the United States more than 600 economists – including seven Nobel Prize winners – recently signed an open letter to Congress calling for an increase in the minimum wage. They said the weight of evidence now demonstrated that increases in the wage had “little or no negative effect on the employment of minimum-wage workers”.
The IMF has also said raising wages of the low paid is good for the economy.
“We find that increasing the income share of the poor and the middle class actually increases growth while a rising income share of the top twenty per cent results in lower growth – that is, when the rich get richer, benefits do not trickle down,” it said.
The origins of the living wage
This year marks the 110th anniversary of the Harvester judgment which, for the first time, established the rules for a fair and reasonable wage.
In 1907, Justice Higgins calculated a wage required to meet the “normal needs of the average employee regarded as a human being living in a civilised community”.
He reasoned that for a man, wife and three children to live in “frugal comfort” a minimum wage of seven shillings was required.
His judgment meant Australia was one of the first countries in the world to establish minimum wages.
This historic ruling came after two decades of wage cuts and worker oppression that followed the depression of the 1890s.
Conditions which, the ACTU argues, “are not dissimilar to what working men and women have recently endured in modern Australia”.
The current rules to determine minimum wage increases require the Fair Work Commission to balance a wide variety of factors, especially the interests of business and the wider economy on the one hand and the interests of the worker on the other.
In practice, the main focus is on the cost of labour – the main concern of employers.
“What is missing from this process is any attempt to define and measure what income the worker needs to have a reasonable standard of living,” says the ACTU.
“Balance can be restored by focusing more on assessing the income that a working family requires to purchase the basic commodities and services that they require for a civilised existence in contemporary Australian cities.”
Read Living Up to the Promise of Harvester:
https://www.actu.org.au/media/1033485/living-up-to-the-promise-of-harvester.pdf