Australian minimum wage increase

The Real Cost of a Rise in the Minimum Wage

Pay Rise for Aussies on Minimum Wage

The Fair Work Commission has announced a pay rise for the two million Aussies on minimum wage.

That might seem like a good thing. But the reality behind this decision is bleak.

Russell Zimmerman, executive director of the Australian Retailers Association, is seriously concerned about the effect of these changes.

According to News.com.au, he said:

With the current state of retail and store closures we’ve seen over the last couple of months, we don’t believe it’s the correct decision by the Fair Work Commission’.

Zimmermann claimed that this rise would create a situation that is ‘not sustainable’.

While workers may think this is putting money in their pockets, it could end up going the other way entirely.

This Pay Rise Could Cost Aussie Jobs

A raise like this could cost jobs according to the Australian Industry Group. Business Insider also reported that the Group claimed a rise of more than $12.50 would threaten jobs.

The final decision allows an increase of almost double that.

According to that report, The Australian Council of Trade Unions (ACTU) were pushing for a $50 per week increase to the minimum wage. So this compromise could be a small mercy, compared to the damage they could have done.

The new minimum wage, at $18.93 per hour, is already substantially higher than most other countries.

Up until January this year, the federal minimum wage in the United States was just $7.25, and hadn’t changed since 2009.

In the UK, the minimum wage of £7.83 is still significantly below ours, even after taking currency exchange into account.

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Australian Employment Rate Falling Behind

Australia is in the top five for gross national income per capita, but our employment rate is falling behind.

Perhaps even more telling, our part time employment rate is one of the highest, behind just two other countries.

Given that our prior minimum wage of $18.28 was still miles ahead of most other countries, it seems selfish to increase that at the risk of falling even further behind on meaningful employment levels.

But if this leads to lost hours or jobs, it could cause a serious drain on our economic resources.

According to ABC News, ACTU secretary Sally McManus said:

People who have been forced into poverty by the inadequacy of this wage should not have to wait every year to see if they will be saved by the Fair Work Commission.

Still, even without the extra 3.5% raise, the Australian minimum wage was already far from the poverty line.

This raise in wages, and the loss of jobs that might follow, could potentially push those people into a level of poverty that is truly desperate.

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Brittany Prentice

Brittany Prentice

Brittany Prentice is a skilled writer here at The Australian Tribune. She has a double degree in Literary Studies and Linguistics from Monash University. She has made contributions to language textbooks in Australia, and translation for robotics software in Japan. She has an appetite for sharing big ideas in business, finance, and politics both locally and around the world.

Comments: 1

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  1. Hi Brittany.

    Just want to know if you decide yourself to write an editorial, giving your point of view on it, or are you given the task to write an editorial with certain “parameters”?

    Any idea where I could look up what exactly is the “poverty line”? And how to compare the minimum wage and poverty line in different countries other than mere income in Aussie Dollar value? Just so I can brag to my family in the UK how generous our lowest earners get paid by comparison to theirs…

    I would like to know how this generous but maybe unsustainable increase in the minimum wage would impact our stagnating small business community where theses minimum wage earners would be spending their excess income. Probably only the bottle shops would benefit, eh? Nudge-nudge-wink-wink-say-no-more…

    Oh, and of course, I would like to know how the small business community who have already received a tax cut(the struggling ones under $50 million turnover a year) are coping with this slap in the face. So unfair that the Fair Work Commission is forcing them to splash out their tax cuts this way. May have to lay off a few of the minimum wage earners to make ends meet, eh?

    I was so hoping Russell Zimmerman, executive director of the Australian Retailers Association, would bring up the tax cuts, and how that is now all gobbled up by the unfair decision by the Fair Work Commission. Maybe he just forgot about that in his indignation.

    Maybe the minimum wage should be set by the Government – after all, it’s some of their tax cuts which now will be thrown to the bludgers instead of to the business owners. It really is getting difficult to satisfy all these voters AND have the most expensive jets in the world for defending our threatened Federation and built those submarines and the list just goes on. And now this – the final straw – a 3.5% waste of money. So glad I don’t have to run this country.