What Lies Beneath The Fair Pay Commission's Decision?

Catholic Social Services Australia's Executive Director, Frank Quinlan, said today that the euphoria over the recent minimum wage announcement should be tempered by assessing the wage increases against inflation, and that the reasoning behind this first decision of the Australian Fair Pay Commission should also be examined.

Mr Quinlan said the rise was good news for low paid workers but that for many it would not even compensate for inflation since their last pay rise of almost 18 months ago. 

"Workers on the Federal Minimum Wage of $484.40 a week will see a nominal increase of 5.65 per cent, but inflation over the relevant period has been approximately 5.4 per cent," Mr Quinlan said.

"It is not clear that low paid workers earning minimum wage rates over $510 a week are even keeping up with inflation.

"It is unfortunate that low paid workers are not sharing, through real wage increases, the benefits of the country's productivity growth and economic prosperity.

"If wages at the low end of the scale can scarcely keep up with inflation in good economic times, how will low paid workers fare when the economic cycle changes?

"The significance of this first Fair Pay Commission decision lies in how the Commission arrived at the announced increases and the precedent this might set for future decisions.

"While it's encouraging to see the greatest increase was awarded to the lowest paid workers, who are earning less than $700 per week, informed public debate, based on careful analysis of this first decision, should now focus on the Commission's underlying reasoning," Mr Quinlan said.

Community debate should focus on the following questions:

• Can we safely assume that changes in the tax and income transfer systems will always, even in less buoyant economic times, compensate for shrinkage in real minimum wages?
• Should the Commission have the benefit of up-to-date research on living expenses when discharging its statutory obligation of "providing a safety net for the low paid"?
• Should the "safety net" concept encompass the needs of workers' families, rather than just the needs of a single individual?
• Should the wages of all low-paid workers be adversely affected because some of them might be subsidised by higher earning household members?
• Even if we agree with the Commission's conclusion that ‘there is a negative relationship between the level of minimum wages and employment', at what point does that relationship justify lower minimum wages?

Mr Quinlan urged employers, unions, community sector organisations and governments to engage in constructive debate on the questions raised by the Commission's decision.

"Developments in setting minimum wages involve important economic, social and moral considerations," Mr Quinlan said.

"The decision cannot be assessed in isolation from significant policy and legislative changes affecting workplaces, employees and unemployed people.

"The removal of the ‘no-disadvantage' test for Australian Workplace Agreements, for example, will mean that some low paid workers will lose overtime and/or penalty rates.

"Such trends are relevant to the Fair Pay Commission's provision of a safety net for low paid people and their families.

"Catholic Social Services Australia looks forward to a broader debate and encourages the Fair Pay Commission to consult widely in the lead up to the mid-2007 decision," Mr Quinlan said.

29 October 2006                                                                                      

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