Fair Work Commission rolls the dice with minimum wage increase

15 June, 2017

The Fair Work Commission recently announced a 3.3% annual wage increase.

"The decision of the Fair Work Commission to award a 3.3% Annual Wage Review increase is out of sync with the current fragile business environment. At a time of low inflation, slow incomes growth, slow productivity growth, rising youth unemployment, and recession-like levels of underemployment, this increase is too high," Australian Industry Group Chief Executive, Innes Willox said.

"The Commission has in effect rolled the dice with a large minimum wage increase. Businesses and the broader community can now only hope that the increase will be sustainable, and that it will not further dent our international competitiveness.

"Australia has already weathered one quarter of economic shrinkage recently (the third quarter of 2016) and  we will find out soon if we suffered another one in the first quarter of 2017. We are sailing very close to the wind.

"The increase amounts to $22.20 on the National Minimum Wage, around $26 on the base trade rate and up to $43 for professionals.

"The increase will be a further disincentive for businesses to take on more workers.

"In its submissions to the Commission, the Australian Industry Group argued for a modest wage increase of 1.5%, which would have been more appropriate in the current economic and business environment.

"Rising energy costs and other cost pressures have eroded businesses' capacity to afford large wage increases. The risk is that the large minimum wage increase awarded will impact most harshly on those low paid workers who it is intended to benefit, through reduced employment," Willox said.