Bosses say budget assistance justifies smaller minimum wage increase
Financial Review
May 17, 2024
Employers have called for wage restraint this year, pointing out that the assistance on power bills and rents outlined in this week’s budget will help workers cope with cost-of-living pressures.
The Australian Industry Group told the annual wage review on Friday that the government’s latest cost-of-living measures reinforced its claim that minimum-wage workers should get an increase of no more than 2.8 per cent this July 1.
The peak body estimates the power bill and rental measures will have a similar value to lower-income households as the re-profiled stage three tax cuts, which it says equate to an $809 a year increase in pre-tax income for the median award employee.
Australian Industry Group chief executive Innes Willox quoted former union chief Bill Kelty in support of his position.
“These measures ensure a real increase in the disposable income of employees on minimum and award wages,” chief executive Innes Willox said.
“The need to take budget support measures into account in reviewing wages has been supported by former ACTU secretary and former RBA board member, Bill Kelty, who is reported as saying this week: ‘If you’re giving energy relief and rent relief then the minimum wage is likely to be lower’.”
The comment was reported by The Australian in the context of the likelihood of the budget measures reducing the Consumer Price Index.
Mr Kelty told AFR Weekend that the budget had “a good set of policies for the minimum wage, [better] than it was last year” where he said increased taxes left workers with less, despite a record 5.75 per cent pay increase.
“It’s got an income tax cut for cost of living, targeted relief for rent and a very specific proposal to help with energy – it’s a much better framework to fix up the real wages of low-income people,” he said.
But the Australian Council of Trade Unions, which is pushing for a 5 per cent increase, rejected AiGroup’s position as an “insult” to low-paid workers.
“Energy bill relief and increases to rent assistance in the budget are welcome relief for workers doing it tough, and many small businesses will also benefit from the energy relief,” president Michele O’Neil said.
“For the big business lobby groups to jump on this cost-of-living measure to argue for lower wages is an insult.
“Their argument is that the budget cost-of-living relief should go into the pockets of business, not our lowest-paid workers.”
She highlighted that not all workers on the minimum wage would receive the relief. The government has recommended that the minimum wage “not go backwards” and has opposed an increase below inflation, which was 3.6 per cent in the March quarter.
AiGroup’s post-budget submission also pointed to recent jobs and wages data that showed slowing private sector pay rises and a weakening labour market to back its position for a smaller increase.
Treasury and the RBA were forecasting real GDP growth to slow to the middle of 2024 and not return to its pre-pandemic average by the end of the forward forecasts, it said.
“In line with these deteriorating economic circumstances, it remains critical for the panel to adopt a cautious approach to adjusting wages,” the submission said.
Ms O’Neil argued a 5 per cent pay rise was urgently needed to tackle cost-of-living pressures, and that “businesses can easily afford this, as profits are well above pre-pandemic levels”.
AiGroup also rebuked the ACTU’s use of Labor’s new gender equity objective for the Fair Work Commission to push for a 9 per cent minimum wage increase for female-dominated awards.
Not-for-profits, such as in disability or early education sectors, “will be entirely unable to meet the kind of wage increases called for, or recover the higher costs from either current government funding arrangements or the often vulnerable people they assist”, the submission said.
The wage panel will hold consultation hearings about this year’s increase on Wednesday.
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