Minimum wage increase outstrips private sector wage growth

Tuesday 6 June, 2017 | By: Darrell Giles | Tags: minimum wage, CPI, penalty rates, workplace relations

The Chamber of Commerce and Industry Queensland (CCIQ) says the Fair Work Commission decision to increase the National Minimum Wage and modern award rates by 3.3 per cent will be the largest increase handed down in seven years.

CCIQ made a submission to the 2016-17 Annual Wage Review process, supporting an increase, but of not more than 1.2 per cent.

min wage

CCIQ General Manager of Advocacy Kate Whittle said the 3.3 per cent increase was much more than anticipated by small business.

“The minimum wage in Australia, the highest in the developed world, will obviously continue to be something that concerns the business community,” she said.

“We were hoping the decision would better reflect the current climate businesses are experiencing, which is a soft labour market, increase in unemployment, low levels of participation and a decline in non-mining investment.

“Particularly in areas where youth unemployment is well into the double figures, the decision handed down may further burden young people or the long-term unemployed as businesses look at what is now affordable to them.”

Ms Whittle said CCIQ, through its submission, had urged the Commission to consider other economic indicators such as productivity growth as a guide.

“The increase of 3.3 per cent is much greater than the 1.8 per cent increase in national private sector wage growth for the year to December 2016,” she said.

“It is even higher than the 2.1 per cent growth in the Consumer Price Index for the same period, which measures inflation and productivity increases.

“Queensland employers are frustrated by the fact that the increasing costs of employment resulting from the national minimum wage adjustment process and annual modern reviews are not being offset by productivity gains.

“Worst case scenario is that the increased costs may price some businesses out of the market, or encourage them to move whatever part of their operation they can overseas.”

However, Ms Whittle believed businesses will still be feeling positive with the reduction in Sunday penalty rates and should not be overly concerned with this increase in the minimum wage.

“If we look at the bigger picture, the Commission’s recent decision to reduce Sunday penalty rates, in the sectors that it affects most, is the key issue when it comes to progressing and modernising our workplace relations system."

The Fair Work Commission decision on the National Minimum Wage can be found here: https://www.fwc.gov.au/documents/sites/wagereview2017/decisions/2017fwcfb3501.pdf

 

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