Ai Group proposes modest minimum wage increase

14 March, 2018

The Australian Industry Group's submission in this year's Annual Wage Review, lodged on March 13, argues that a modest wage increase of 1.8% is warranted.

"This equates to an increase of about $12.50 per week in the National Minimum Wage and about $14.60 per week at the base trade level," said Australian Industry Group Chief Executive Innes Willox.

"The Expert Panel of the Fair Work Commission needs to take a cautious approach when determining the quantum of this year's minimum wage increase. An excessive increase would reduce the job security of low paid workers and reduce employment opportunities for the unemployed and underemployed.

"Despite some improvements in GDP and employment growth, national disposable income growth remains weak, and unemployment and underemployment rates continue to indicate considerable spare capacity.

"Businesses are under pressure. Steep energy price rises are proving difficult to pass on to customers and are squeezing margins across a wide range of industries. Also, productivity growth has been exceedingly weak over the past decade and over the current productivity growth cycle.

"Global competitiveness is a key risk for Australian businesses. Australia already has one of the highest national minimum wage rates in the world, and most Australian workers are entitled to award wage rates that are higher than the National Minimum Wage.

"Currently, background inflation in Australia is weak and this means that a smaller minimum wage increase will generate real wage increases for workers, including those in low-wage jobs. Now is not the time to take risks with minimum wage setting.

"The 3.3 per cent minimum wage increase awarded by the Panel last year was exceptionally high and out of step with economic factors. It is essential that the increase awarded by the Panel this year is much more modest. When all of the relevant factors are weighed up, a 1.8 per cent minimum wage increase is appropriate," Willox said.

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