The Turnbull government has asked the Fair Work Commission to take a “cautious approach” to boosting the minimum wage, urging the body to take into account “the uncertain economic outlook and the need to boost employment and job creation, particularly for young people and the low-skilled”.
The government has used its submission to the annual minimum wage review process to warn that wage increases not supported by higher productivity or higher prices for customers and consumers “will most likely cost jobs”.
“Excessive increases in minimum wages are likely to reduce employment in award-reliant industries, particularly for youth, and especially when wages growth elsewhere in the economy remains moderate and inflation is low,” the submission says.
Labor is likely to pounce on the government’s expression of caution to build on its political campaign against the cut in Sunday penalty rates, and the government’s support for that decision.
The government’s caution about handing a wage increase to Australia’s lowest-paid workers comes against a backdrop of historically low wages growth – a trend fuelling voter concern about income and job security.
The opposition has used its submission to the tribunal to argue that the FWC should support “a fair and economically responsible increase in the national minimum wage and all modern award wage rates”.
The Australian Council of Trade Unions is pushing for a $45-a-week increase in the minimum wage.
The ACTU points out in its submission that “real wages are growing at a glacial pace” and it submits wage distribution over the last three decades “has been characterised by stagnation at to bottom and expansion at the top”.
The government says in its minimum wage review submission the economy continues to transition from the investment phase to the production phase of the mining boom, and it notes that the review “occurs in the midst of this domestic transition”.
“Wage flexibility is an important mechanism to support employment during this period of ongoing structural adjustment in the economy,” the submission says.
It urges the FWC to take into account the need to help long-term unemployed people and other disadvantaged groups enter the workforce, “noting that low-paid employment is an important stepping stone to sustained employment and higher paying jobs”.
The submission notes that employment growth is driven by a range of factors, “including the cost of wages, the broad economic environment and specific business conditions”.
The government points to historically low rates of wages growth, and argues “moderate wage growth has been helping to support employment in recent years”.
Labor set up its political attack on the government’s cautious attitude to a minimum wage increase in question time on Wednesday, which degenerated into a bruising clash between the two leaders over their history before entering parliament.
On Wednesday Labor persisted with its daily penalty rates attack against the government and upped the ante, posing a series of questions in parliament about Malcolm Turnbull’s role in settling litigation after the collapse of HIH Insurance in 2001.
Labor raising the HIH controversy infuriated the prime minister. The escalation followed the government’s attempt for the past week to hammer Bill Shorten over deals he struck with big companies while an official of the Australian Workers’ Union.
Labor has also been tying the penalty rates decision into its daily political attack on the government’s proposed tax cuts for big business – with a Senate vote looming on that package before the end of the week.
