Labor yesterday made a submission to the Fair Work Commission (FWC) annual wage review recommending that minimum and award wages be raised above inflation.
The submission goes a step further than prior years’. Previously, Labor (filing submissions as the federal government) had recommended that real wages of low-paid workers simply not go backward. Now – in a sign that the election campaign is heating up – the party is pushing for a real wage increase.
Labor says the change would help around three million workers across the country and be “both economically responsible and fair”.
An increase in minimum and awards wages would have an tangible impact on small-business owners – who have already seen median wages grow 5.3 per cent over the past year. Though the proposed measure would be great for workers – and potentially lead to increased spending at small businesses – some small-business owners who are already cash-strapped may be looking on with concern.
“When wages rise faster than productivity, it puts employers in a bind – especially those without the scale or pricing power to absorb higher payroll costs,” said Ben Thompson, CEO and Co-Founder of Employment Hero. “Many small businesses may be forced to reduce hours, pause hiring, or in some cases, reassess their viability altogether.”
But higher wages can also lead to increased productivity, pointed out Chris Wright, Professor of Work and Labour Market Policy at the University of Sydney. In an essay penned for The Conversation, the labour market expert suggested that workers who feel they are paid fairly may be more likely to work harder – and less likely to leave their employer and necessitate a costly rehiring process.
