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Monday, May 23, 2022

Calls for modest wage increase and end to low wage ‘design feature’

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The spending power of many Australians will continue to go backwards without Federal Government intervention, according to a study of trends across the economy.

The report released today by the Adelaide Law School, Melbourne Law School and the Centre for Future Work suggests wages should grow faster than four per cent a year to rebalance productivity growth, inflation and income distribution.

With inflation running hot and interest rates on the rise, union leaders are calling for a pay rise of 5.5 per cent for the one in four workers who rely on the Fair Work Commission’s annual review of the legally enforceable minimum wage.

The labour market experts want reforms for gig economy workers who operate between cracks in current pay laws, a crackdown on wage theft by employers who underpay their staff, an end to caps on wage rises in the public sector, and higher minimum rates of pay overall.

Co-author economist Jim Stanford said in the report it has become a “design feature” of the Australian economy to try to keep wage growth low.

He is not optimistic wages will pull out of a decade-long slump without active wage-boosting measures.

The research finds no hard evidence wages are on the up, despite unemployment dropping to four per cent, with real income going backwards as inflation bites into what hard-earned dollars are worth.

Survey data released by the Australian Council of Trade Unions (ACTU) shows women in particular are dissatisfied by the Federal Government approach to reducing the cost of living (74 per cent dissatisfied), persistent low wages (61 per cent) and unaffordable housing (73 per cent).

But employers warn the Fair Work Commission must be cautious with economic conditions still precarious.

Australian Industry Group CEO Innes Willox proposes a “modest wage increase” of 2.5 per cent, taking into account the additional benefit of the 0.5 per cent rise in the superannuation guarantee paid by employers from July 1 and the rise in the low and middle income tax offset in the March budget.

“Adding these increases to our proposal would result in the equivalent of a 4.3 per cent increase in pre-tax remuneration for low-paid employees,” he said.

Wages report co-author associate professor Tess Hardy said a combination of underfunding, outsourcing, and precarious casual employment has suppressed wages in some of the most important parts of the economy.

“The aged care royal commission identified this problem, and directed government to solve it, but so far the Government has done nothing to improve wages,” she said.

The industrial relations umpire must soon decide on calls for a 25 per cent wage rise for aged care and home care workers, which unions say would more fairly reward their roles, skills and tough working conditions.

To read the report: The Wages Crisis: Revisited, click here.

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