Employers slam unions' higher wage hike proposal of 6%
Australia's national employer association is recommending a 3.9% increase to the minimum wage, as unions raised their proposal in the wake of external factors affecting the country's economy.
The Australian Industry Group (Ai Group) announced that it is proposing a 3.9% increase amid the global oil shock that it said "damaged business confidence and certainty."
"Its impacts are far from over and are likely to worsen in the months ahead as inflation and supply disruption take hold," said Ai Group chief executive Innes Willox in a statement.
"This demands that the Fair Work Commission's Expert Panel take a cautious and risk-sensitive approach in setting the minimum and award wages this year."
The Ai Group previously held off in giving a specific recommendation for a wage increase in the wake of the disruption caused by the conflict in the Middle East, noting that it will be difficult to strike a balance between the interests of employers and employees.
But its latest proposal underscores that employers are now feeling the impacts of surging costs for fuel and other industrial commodities.
"These cost increases should loom large in the considerations of the Expert Panel," Willox said.
"Businesses simply do not have an endless capacity to absorb costs – including wage increases – without passing them on to consumers or fundamentally changing how they work, including the composition of their workforce."
Wage hike disagreement
The Ai Group's proposal is slightly higher than the 3.5% minimum wage increase recommended by the Australian Chamber of Commerce and Industry, which called its proposal a "reasonable" and "sustainable" one in the current economic environment.
It is much lower, however, than the newly revised proposal from the Australian Council of Trade Unions (ACTU), which raised its minimum wage increase recommendation to six per cent from the previous 5%.
ACTU Secretary Sally McManus said they revised their proposal after the recent Budget forecast that inflation is expected to reach five per cent by the middle of this year.
"The lowest-paid workers in Australia should not go backwards because of Donald Trump's war. They have the least capacity to cope with price increases, so their wages must keep up," McManus said in a statement.
"Unions will argue for a wage rise of six per cent because inflation is now expected to hit five per cent and these workers are still behind where they were in 2021."
McManus said that claims that this increase will put pressure on inflation are "not grounded in reality."
"In fact, the total value of our revised six per cent claim will only add 0.64% – or less than one percentage point – to the national wages bill," she added.
'Ludicrous' wage hike recommendation
But the Ai Group warned that an increase of six per cent risks disemployment by imposing higher wage costs on businesses.
"The ACTU's revised claim for a six per cent increase in minimum and award wages is ludicrous," Willox said.
"It is significantly higher than expected inflation, and risks disemployment by driving higher wage costs into businesses already under strain from the crisis."
The Ai Group chief added that they acknowledge the cost of living pressures on households due to the inflation spike caused by the crisis.
"However, lifting wages to match what is expected to be a temporary inflation spike will exacerbate the long-term negative effects on an already weakening economy," he said.
The FWC reviews and sets the minimum wage hike every financial year. It has begun seeking submissions from various groups on the increase.
