Australians earning the minimum wage would receive a raise in line with inflation if the national workplace adjudicator follows Labour’s recommendation.
The Albanian government has confirmed that for the second year in a row it will support a wage increase for Australia’s lowest paid workers that will keep pace with the cost of living.
The Fair Work Commission is conducting its annual wage review to determine whether to raise the national minimum wage for Australia’s lowest paid workers from $21.38 per hour and whether to remove pay rates.
About one in four workers, or 2.67 million people, is expected to be directly affected by this decision, with most changes expected to take effect in the first full pay period on or after July 1.
Employment Secretary Tony Burke and Treasurer Jim Chalmers on Thursday evening previewed the government’s provisional submission to the review.
The submission, which will be published in full on Friday, is not expected to give an exact figure of how much the government wants wages to rise.
“The Australian Government is recommending to the Fair Work Commission to ensure that the real wages of Australia’s low-wage workers do not deteriorate,” the submission read.
But Mr Burke and Dr Chalmers said their entry this year did not suggest that “general wages” should automatically increase in line with inflation or that inflation was the only factor the framework contract should take into account.
Ministers have yet to clarify whether they only want minimum wage workers to receive a pay rise in line with inflation or whether they want to apply the same threshold to all workers affected by the FWC’s pay review, including those with higher pay rates.
“While nominal wage growth has increased, high inflation has caused real wages to lag behind,” Mr Burke and Dr Chalmers said in a statement as they previewed their entry.
“This has had the greatest impact on Australia’s low-wage workers and their families – many of whom do not have the savings to fall back on or the wages to cover the rise in the cost of living.
“These employees are more likely to be women, younger than 30 years old and working as occasional workers. The government does not want them to go backwards.”
Inflation fell again to 6.8 percent in February, but is still well above the Reserve Bank of Australia’s target of 2 to 3 percent.
Three more sets of inflation numbers will be released before the FWC makes its decision on minimum wage and compensation rates in June.
Speaking to reporters earlier on Thursday, Dr Chalmers brushed aside concerns that an increase in the minimum wage would push inflation further up.
“In my opinion, there is no credible view that we have an inflation problem because our lowest paid workers are overpaid,” he said.
In 2022, Labor recommended an increase in line with inflation – which was then 5.1 per cent – in its submission to the FWC wage review. The labor court increased the minimum wage by 5.2 percent.
Australia’s highest trade union body has urged the FWC to raise the minimum hourly wage for Australia’s lowest paid people by 7 per cent to $22.88 from July, bringing the annual wage for these workers to $45,337 a year.
ACTU Secretary Sally McManus said people should stop using the threat of a wage-price spiral as a reason not to raise wages for low-wage workers.
But corporate lobby groups will call for restraint, citing fears that a big pay rise could plunge Australia into recession.