June 4, 2010
Minimum wages rise by $26 a week to $569.90 a week or a minimum rate of $15 an hour, from July 1 2010.
Bringing the minimum wage to $29,640 a year.
BUSINESS is angry, but the Australian Deputy Prime Minister, Julia Gillard, says the $26 weekly pay rise granted to low-income earners represents the final repudiation of Work Choices and will not lead to rising inflation and interest rates.
The inaugural minimum wage decision by Fair Work Australia yesterday delivered a pay rise only $1 less than that sought by unions, lifting the minimum wage to $570 from next month.
The decision will be a relief to low-paid workers after the previous pay-setting body, the Fair Pay Commission, froze minimum wages last year because of financial turmoil.
Ms Gillard said: ''We have never believed that the path to economic prosperity lay in cutting the economic conditions and wages of working Australians who face cost-of-living pressures.''
In coming to its decision, Fair Work Australia's Minimum Wage Panel cited conflicting evidence about whether pay increases for low-income earners harmed the economy and employment.
Instead, it noted that the economic gains of the past decade had not extended to all workers. The incidence of low-paid workers - those earning less than two-thirds of the average wage - increased from 10.6 per cent in 2003 to 14.6 per cent in 2007.
And while productivity - in the form of rising GDP per hour worked - had grown 16 per cent in the past 10 years, the real federal minimum wage only increased 2.4 per cent in the same period.
The panel's decision said: ''Strong employment growth over the past decade in Australia, in the context of annual increases in minimum wages (other than in 2009) suggests that any impact of moderate minimum wage increases on employment levels is swamped by other factors affecting the demand for labor.
''In the context of productivity growth and increasing community living standards, the maintenance of the real value of award wages alone would not adequately maintain relative living standards.''
However, business groups dubbed the decision hasty and costly. The director of economics and industry policy at the Australian Chamber of Commerce and Industry, Greg Evans, called the pay rise ''extreme and excessive and a serious blow to Australian businesses''.
The Coalition supported the wage rise, but with a caveat.
''I never begrudge workers a wage rise,'' the Opposition Leader, Tony Abbott, said.
''I think that workers on low wages are always doing it tough. My concern always, though, is with jobs, and I just hope that one man's wage rise doesn't turn out to be another man's job.''
But the Australian Council of Trade Unions said cleaners, retail and hospitality staff, childcare and farm workers would all benefit.
The secretary of the ACTU, Jeff Lawrence, said: ''Today's decision will restore some equity and fairness into our economy.''
CANBERRA—In a victory for unions, Australia's new independent workplace-relations tribunal said Thursday it will raise the country's minimum wage by 4.8% to 569.90 Australian dollars (about US$518.95) per week.
The decision raises the wage rate paid to the country's lowest paid workers to A$15 an hour. It falls just A$1 short of calls by organized labor for a pay rise of A$27 a week.
But it has angered business groups that had lobbied for a more measured rise as small businesses in particular shake off the effects of the recent global financial crisis.
"This decision has nailed the coffin in on small business and thousands of jobs for working Australians," said Scott Driscoll, national president of the United Retail Federation lobby.
It also alerts the Reserve Bank of Australia to potential wage pressures, especially as economists expect the engines of the A$1.2 trillion economy to fire-up fully later in 2010 as a mining boom sparks recovery. The central bank monitors wage growth as a bellwether for the broader inflation outlook.
Interest rates have been raised six times since October, taking the cash rate target to 4.5%, amid rising concerns about inflation. Unemployment in April was 5.4%, close to what Treasury considers full employment. Consumer price index inflation was running at 2.9% in the first quarter compared with a year ago—already at the top of the central bank's 2%-to-3% target band.
The proportion of Australian workers on the minimum wage is relatively small—1.4 million people, or a little over 10% of the working population. But business groups, especially retailers, worry the ruling could set a precedent, driving up wage demands across the broader economy.
Last year, the minimum wage rate was held steady in recognition of uncertain times for the economy.
"While a case existed for a modest increase, this decision goes well beyond what was responsible or justified," said Greg Evans, director of economics and industry policy at business lobby the Australian Chamber of Commerce and Industry, adding that many small businesses "will be left reeling".
But Geoffrey Giudice, president of the Fair Work Australia tribunal, said the increase was justified because real prices have risen in the economy while minimum wages haven't.
"There is a strong case for a rise in minimum wages to provide a fair and relevant safety net to protect the relevant living standards of [low-wage] employees," he said.
Deputy Prime Minister Julia Gillard said the decision was "economically responsible and fair."
The Australian economy grew at a much slower pace in the first quarter than at the end of last year as the withdrawal of economic stimulus, surprising weakness in business investment and sluggish growth in export volumes took some of the steam out of activity, according to official gross domestic product data released Wednesday.
But economists say the moderation will be short-lived as companies continue to plan significant investment, especially in the mining sector, while a substantial upswing in commodity prices is already washing through the economy.
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