THE AUSTRALIAN Industrial Relations Commission (AIRC) recently granted a $19 weekly increase to Australian workers on federal awards, bringing the minimum weekly wage to $467.40, before tax
THE AUSTRALIAN Industrial Relations Commission (AIRC) recently granted a $19 weekly increase to Australian workers on federal awards, bringing the minimum weekly wage to $467.40, before tax.
In handing down its decision in the National Minimum Wage Case, the commission stopped short of the Australian Council of Trade Unions’ claim for a $26.60 increase, but still drew an angry response from business groups.
“It is the highest increase awarded since the safety net adjustment system was introduced more than a decade ago and therefore takes Australia into uncharted waters,” said Australian Industry Group chief executive Heather Ridout.
After on-costs such as superannuation, workers’ compensation and payroll tax, she estimated the cost to employers will be around $25 per employee per week.
“The benefits which flow to the low paid from the Safety Net Review Case are not what they first seem,” she said.
Taking tax on the increase into account and related downward adjustments to family benefits, she said the overall income gains are substantially reduced. Of the $19 wage increase awarded by the commission, a single income family with two children earning $450 per week will receive only $13, she said.
“That is, the employer will pay almost double what the employee will receive.”
In reaching its decision, the commission recognised that adjustments made to award wages are a relatively inefficient means of increasing the disposable income of the low paid.
“On-costs mean that for every dollar awarded by the commission, employers must spend more than $1, whereas the impact of tax and tax transfer arrangements means that, the employee receives substantially less than $1 as additional disposable income,” the commission said.
ACTU secretary Greg Combet said that hotel workers, cleaners, childcare workers, waiters, bar attendants and many other casual and part time workers will benefit from this pay rise.
While the minimum wage has broken through the ceiling of $12 an hour, he said the AIRC decision is a cautious one given the current strength of the Australian economy.
“The ACTU believed that a more substantial increase of up to $26.60 a week was justified.”
Combet said the commission’s decision was a clear rebuff for employer groups and the federal government, who were supporting a pay rise of $10 a week.
While the decision will affect about 1.6 million award workers, economists said it would not have any impact on inflation or wages growth.
“The living wage increases that the IRC has been giving in the last couple of years have been consistent with ongoing low inflation,” said Macquarie Bank senior economist Brian Redican.
“So we wouldn’t expect that kind of wage increase to have any kind of implication for wages growth down the track or inflation.
“There’s always the potential that these kinds of decisions will have flow-on effects throughout other sectors of the community, but in the last couple of years at least the IRC has been very conscious of that.”
