static image

Excessive minimum wage increase has the potential to be a major disincentive to employment

"The 3.5 per cent minimum wage increase awarded today by the Fair Work Commission has the potential to be a major disincentive to employment. It is out of step with wage movements across the economy, with inflation, and with the pressures that many businesses are under," Australian Industry Group Chief Executive, Innes Willox, said today.

"Australia already had the second highest national minimum wage in the world (just behind France) and today's decision runs the risk of further harming the competitiveness of Australian businesses.

"In its decision (at paragraph [104]), the Fair Work Commission made the following pertinent comments about the ACTU's excessive wage claim in the case:

'…. an increase of the size proposed by ACCER and the ACTU, is likely to run a substantial risk of adverse employment effects. Such adverse effects will impact on those groups who are already marginalised in the labour market, with a corresponding impact on the vulnerability of households to poverty due to loss of employment or hours of work. An increase of the magnitude proposed by ACCER and the ACTU would also carry a substantial risk of reducing the employment opportunities for low skilled workers, including many young persons, who are looking for work.'

"It is to be hoped that the above pertinent remarks do not prove to be equally applicable to the 3.5% wage increase awarded by the Commission.

"While the FWC describes the 3.5% increase it has awarded as 'modest', it is well above inflation and it is not supported by improved productivity. For the many thousands of small and medium-sized businesses responsible for the bulk of employment in Australia, a 3.5% increase in the costs of employment is anything but modest. Contrary to the suggestion by the Commission, there remains a clear risk that these businesses will be less able to afford creating new jobs or to offering their existing employees additional hours.

"The increase will result in a $24.30 per week increase to the National Minimum Wage, a $28.30 increase to the base trade rate and an increase of up to $47 per week to the award rates for professionals," Mr Willox said.

Media enquiries: Tony Melville – 0419 190 347