The Australian Industry Group has today released its initial submission to the Annual Wage Review. Ai Group urges the Fair Work Commission to adopt a moderate increase in minimum wages of not more than 2.8 per cent which would avoid exacerbating risks to a slowing Australian economy.


Ai Group Chief Executive, Innes Willox said: "In setting minimum wages this year, the Fair Work Commission should give particular regard to the deteriorating state of the Australian economy. GDP growth is slowing markedly, and some industries are under significant financial pressure. Meanwhile, inflation is moderating but remains too high, and recent productivity performance has been especially poor.


"The Commission should also be mindful of the cumulative impact of the unprecedently high increases over the past two years, as well as the business impact of a further 0.5 percentage points increase to superannuation obligations that will commence from July.


"Business capacity to pay increases in minimum wages is significantly lower than in previous years characterised by strong post-pandemic growth.


"The Commission should also give regard to the early signs of weakness in the labour market in the latter part of 2023. While aggregate increases in unemployment have been moderate to date, there are pockets experiencing reduced employment levels, particularly in some award-reliant industries, for full-time employment, and for youth employees.


"The principal risk for the Australian labour market over the coming year is not weak wages growth but weak employment generation.


"Having regard to these economic challenges, any increase in the National Minimum Wage should not exceed a figure of 2.8 per cent. A moderate increase of this size would lower the likelihood of negative impacts on employment, and raise the likelihood of an earlier reduction in interest rates by lowering inflationary pressures”.


"In practical terms, this would deliver a real increase in the disposable incomes of many workers once the additional benefits from recently announced tax relief and increased levels of government support are taken into account.


"Minimum wage increases should not be the only means used to address cost-of-living pressures for low-income households. Other forms of government income support – such as recently announced tax changes, and further measures expected in the May budget – must be used in tandem with minimum wages to help protect the real income levels of households.


“The Commission must strike a responsible balance between the interconnected interests of employers, employees and the broader community. Australia's future employment, inflation and interest rate paths will be at risk under the reckless reported ACTU proposal for a 5 per cent increase.


"The ACTU continues to erroneously and mischievously claim the minimum wage decision affects only a small and narrow cohort of workers and their employers. This is wrong. 


"Approximately 2.9 million workers are directly impacted by the decision through the award system. The minimum wage decision also influences wage negotiations through the enterprise bargaining system, and broader wage setting in the labour market. 


"To suggest the decision has a minimal impact on workplaces across the economy is simply a myth.


"The proposed increase may be adjusted in further submissions made during the Review process depending on any relevant data that is released in the meantime, as well asfurther measures that the Government may introduce to assist low-income households," Mr Willox said.


Ai Group’s Initial Submission to the FWC Annual Wage Review 2023-24 is available here.


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