Finance Work Union push for higher wages will cost jobs, business group warns

Union push for higher wages will cost jobs, business group warns

business unions wage rise
The Ai Group has slammed a call by unions for a big lift in the minimum wage. Photo: AAP
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Businesses would be worse off and jobs would be lost if the minimum wage were lifted as much as unions want, a peak employers’ body has warned.

The Australian Industry Group has expressed the sentiment in a fresh submission to the Fair Work Commission’s (FWC) annual minimum wage review.

In its original submission to the review, the business group argued the minimum wage should be lifted by 2 per cent this year. That would mean an increase of about $14.40 a week to the existing level of $719.20.

The modest increase is necessary because the economy has moved into the “slow lane” and businesses are struggling to cope, the Ai Group said.

But the Australian Council of Trade Unions, in its submission to the FWC, has called for a 6 per cent increase, equivalent to a weekly rise of $43.

ACTU secretary Sally McManus said the significant spike was needed to ensure that no full-time worker was living in poverty.

The FWC has previously conceded that Australia’s minimum wage of $37,398 per annum – or less than $20 an hour – leaves many full-time workers in poverty.

Labor leader Bill Shorten last month pledged to introduce a “living wage” to ensure that no full-time worker would live in poverty. However, trade unions have estimated that would require a $72.80-a-week increase to the minimum wage.

Mr Shorten did not provide a timeframe for the transition, or even a proposed annual increase to the minimum wage, but instead asked the FWC to determine the level of the wage, if Labor is elected.

The ACTU last week held a national day of action, with thousands of workers – including more than 100,000 in Melbourne – marching to demand higher wages and better job security.

In a reply to the ACTU’s submission to the FWC, published on Monday, the Ai Group said what the unions wanted was “obviously unsustainable”.

“A minimum wage increase of this magnitude would be a certain way to destroy jobs, harm businesses and threaten Australia’s long period of economic growth,” its reply said.

This month’s federal budget acknowledged that Australia’s economy was slowing by revising down forecasts for growth, it noted.

The Ai Group said the budget also promised an increase to a tax offset for low- and middle-income earners. That would increase the disposable income of people earning the current minimum wage.

The Coalition has repeatedly claimed higher wages would put further burdens on small businesses.

“What Bill Shorten has said in the last couple of days basically putting further burdens on the small and family businesses that employ countless number of Australians, and effectively making them choose who will stay and who will get to go,” Prime Minister Scott Morrison said last month.

“I want Australians to keep more of what they earn. Bill Shorten wants to take more from Australians from what they earn.”

Meanwhile Treasurer Josh Frydenberg has pointed to falls in some living costs such as pharmaceutical products.

“Further, health insurance premiums are now growing at their lowest rate since before 2006,” Mr Frydenberg said. “The CPI also shows child care prices remain down 8.3 per cent through the year, following the introduction of the Child Care Subsidy from 2 July 2018 which saw the largest quarterly fall in child care prices in a decade.”

-with AAP