ACTU Secretary Jeff Lawrence announced in an address to the National Press Club on the 12 of March that unions seek a $26 a week pay rise for 1.6 million Australian workers that rely on minimum award wages in this year’s national Minimum Wage Case.
Mr Lawrence said that a $26 a week pay rise for the low paid is economically responsible and will not add to inflation.
Mr Lawrence said:
“Rising petrol, housing and food costs are putting working Australians under considerable financial pressure and workers that rely on minimum award wages need a real wage rise.
“Many working families are simply not benefiting from the mining boom or have been hurt by the loss of wages and conditions under the former Coalition Government’s Work Choices IR laws.
“More than a million low paid workers went backwards in real terms by up to $44 a week or $2,200 a year over the last three years, according to ACTU research.
“While in 2007 the Fair Pay Commission gave minimum award wage workers only $10 a week, it was recently revealed that Professor Ian Harper, head of the Fair Pay Commission personally got a pay rise of $38,000 a year, a 47% increase and 16 times the rate of inflation.
“How can anyone expect workers on average incomes to exercise restraint when none is shown by those being paid ten or twenty or one hundred times as much?
“Pay increases of corporate executives and directors have risen by an astronomical 30 per cent in the last 12 months.
“Cutting the wages of shop assistants, cleaners or workers in factories and call centres, will do nothing to increase productive capacity in the economy generally, nor to restrain inflation,” said Mr Lawrence.
The ACTU $26 a week claim would raise the current Federal Minimum Wage from $522.12 to $548.12 a week (up to $14.42 an hour).
The increase in the minimum award wage for people at the tradesperson’s rate would be 4.2% — equal to other wage movements (Wage Price Index) over the period 2005 to 2008.
Impact of the 2007 Decision
During a period of economic prosperity the AFPC is acting contrary to its statutory obligations when it continues to reduce the real value of minimum wages.
Sixty two per cent of minimum wage workers have suffered a decrease in their real wages as a result of the two Minimum Wage determinations by the AFPC.
The last AFPC determination increased weekly wages in real terms by 6 cents for 4 per cent of minimum wage workers and reduced the wage of 96 per cent of minimum wage earners between 28 cents and $15.67 per week.
These real wage declines would have been greater had the treatment of child care costs been unaltered in the September Quarter 2007 CPI.
The value of the income safety net needs to take into account changes in the real value of minimum wages beyond the FMW. Only 4 per cent of minimum wage workers receive the Standard FMW. It is disingenuous to argue that minimum wages have been “broadly steady” in real value.
Most workers employed on the Federal Minimum Wage, that is the lowest of the pay scales, are on that rate for a very limited period.
The ACTU rejects the proposition that reducing the value of minimum wages compared to average wages will boost employment opportunities for the unemployed.
The Federal Minimum Wage has grown by less than the growth in wages as measured by the Wage Price Index.
Providing a safety net for the low paid
More working families than ever before are under financial pressure.
The AFPC has an obligation to ensure there is an adequate safety net.
Increases in income support payments and tax reductions do have an impact on those low paid workers who qualify. This does not diminish the AFPC’s role in ensuring an adequate wage safety net.
Wages provide an incentive to work and are a necessary protection against hardship and reward for work and as such should be treated differently to social welfare payments.
Low income earners face relatively low effective marginal tax rates.
Low income wage earners come from households at the bottom 40 per cent of income distribution.
Working households with rising fuel, housing and other costs are under tremendous financial pressure.
As an example, full-time child care workers cannot afford home ownership, with mortgage repayments in many instances exceeding gross annual income.
Indicators show that low paid workers are suffering higher levels of financial stress than other workers.
Changes to the tax arrangements will only partially offset the extreme pressures facing low income earners.
Decent wages are the key to improved living standards.
The ACTU rejects the notion that employees who depend on minimum wages should suffer a cut in real wages.