Calls to end Australia’s low wage ‘design feature’

A study of economic trends says wages should grow faster than 4 per cent a year.

A study of economic trends says wages should grow faster than 4 per cent a year. Photo: AAP

The spending power of many Australians will continue to go backwards without federal government intervention, according to a study of trends across the economy.

The report released on Wednesday by the Adelaide Law School, Melbourne Law School and the Centre for Future Work suggests wages should grow faster than 4 per cent a year to rebalance productivity growth, inflation and income distribution.

With inflation running hot and interest rates on the rise, union leaders want a pay rise of 5.5 per cent for the one in four workers who rely on the Fair Work Commission’s annual review of the legally enforceable minimum wage.

The labour market experts want reforms for gig economy workers who operate between cracks in pay laws, a crackdown on wage theft by employers who underpay their staff, an end to caps on wage rises in the public sector, and higher minimum rates of pay overall.

Co-author economist Jim Stanford said in the report it had become a “design feature” of the Australian economy to try to keep wage growth low.

He was not optimistic wages would pull out of a decade-long slump without active wage-boosting measures.

The research found no hard evidence wages were on the up, despite unemployment dropping to 4 per cent, with real income going backwards as inflation bites into the worth of hard-earned dollars.

Survey data released by the Australian Council of Trade Unions shows women in particular are dissatisfied by the federal government approach to reducing the cost of living (74 per cent dissatisfied), persistent low wages (61 per cent) and unaffordable housing (73 per cent).

But employers warned the Fair Work Commission must be cautious during still precarious economic conditions.

Australian Industry Group CEO Innes Willox proposed a “modest wage increase” of 2.5 per cent, taking into account the additional benefit of the 0.5 per cent rise in the superannuation guarantee paid by employers from July 1 and the rise in the low and middle-income tax offset in the March budget.

“Adding these increases to our proposal would result in the equivalent of a 4.3 per cent increase in pre-tax remuneration for low-paid employees,” he said.

Wages report co-author associate professor Tess Hardy said a combination of underfunding, outsourcing, and precarious casual employment had suppressed wages in some of the most important parts of the economy.

“The aged care royal commission identified this problem, and directed government to solve it, but so far the government has done nothing to improve wages,” she said.

The industrial relations umpire must soon decide on calls for a 25 per cent wage rise for aged care and home care workers, which unions say would more fairly reward their roles, skills and tough working conditions.


Stay informed, daily
A FREE subscription to The New Daily arrives every morning and evening.
The New Daily is a trusted source of national news and information and is provided free for all Australians. Read our editorial charter
Copyright © 2024 The New Daily.
All rights reserved.