ACTU submits claim for $26.60 increase in national minimum wage

20 February 2005 - The ACTU has lodged its main submission to the Australian Industrial Relations Commission for a $26.60 increase in the national minimum wage for 1.6 million low paid Australians. Unions feel this may be the last ever national wage case of its type.

ACTU Secretary Greg Combet said:

"We fear the Federal Government is planning to abolish the system of minimum award wages and conditions that has underpinned the job security and living standards of working Australians for 100 years.

"Abolishing or nobbling the independent role of the Australian Industrial Relations Commission in setting minimum award wages would be a disaster for the living standards of low-paid workers and their families.

"We don’t want a US style system in Australia where large numbers of working people are forced to live in poverty.

"Minimum wages in the US are just $5.15 an hour and have been increased only once (by 40¢) since 1996.

"If that’s the path business and the government want to take Australia down then workers, families will be the losers.

"Hundreds of thousands of hard-working hotel workers, cleaners, waiters, bar attendants; sales assistants and other low paid Australians would find it practically impossible to get a pay rise.

"Without a national wage case conducted by an independent umpire, working families would see prices rise for food; petrol, clothing, rent and other basic necessities while their wages remain frozen. This is a recipe for failing living standards and increasing the number of working poor.

"The uncertain future of the award system highlights the importance of this year’s minimum wage case in which the ACTU is seeking to raise Australia's legal adult minimum wage from $12.30 to $13.00 an hour. For full time adult workers this will mean a rise from the current $467.40 a week to $494 a week, or from $24,370 a year to $25,757 a year.

"The ACTU submission argues that this pay rise is moderate and economically responsible with official data showing the economy in good shape:

"Australia is in the midst of 14 years of economic growth, the longest expansion on record, with future growth forecast at 3%, unemployment at a 28-year low, inflation in the low 2-3% range, and company profits at record levels.

"Recent minimum wage rises have had no negative impact on jobs and productivity growth is averaging 2.4% a year for the past ten years.

"Economic output of the three most award-reliant industries of Retail, Accommodation, cafes and restaurants and Health and community services continues to outperform other industries and is well above real federal minimum wages growth.

"Hard working low paid Australians deserve a share in national economic prosperity and this year’s minimum wage case could be their last chance for a pay rise in a long while."

The Federal Government responded that the ACTU’s claim for a $26.60 increasecompletely ignores the effect this would have on the job prospects of the unemployed.

Minister for Employment and Workplace Relations, Kevin Andrews said that, unlike the ACTU, the Howard Government is acutely aware of the impact of a high federal minimum wage and the adverse effect that it can have on the unemployed, low skilled and young Australians.

"The ACTU’s claim will also be inflationary because any increases in the minimum wage will flow right through the award system to a significant number of higher paid workers, regardless of their productivity levels.

"The Business Council of Australia has recently highlighted the unintended consequences of trying to use the workplace relations and award system to achieve so called ‘fairness’ for workers. It often has the opposite result, leading to the creation of fewer jobs and unemployment being higher than it should be."

Kevion Andrews said year after year the ACTU seeks an increase in the federal minimum wage which is at the high end of the scale and which ignores any detrimental effect that this may have on the unemployed and low skilled.

"The negative effect of a high minimum wage is felt most severely by those who are unemployed, the low skilled, young people and women who are seeking to return to the workforce. Such irresponsible claims price these people out of jobs."

Kevin Andrews urged the ACTU to reconsider their claim and take account of the negative effects that it will have on unemployment, inflation and the wider Australian economy.