wages growth

The High Cost of Minimum Wage Changes

We all want to earn more money. Right?

But at the end of the day, someone has to pay us that money. That cost isn’t just passed on to some intangible corporation either. It’s mostly passed on to the customers of your business who will need to pay more for your goods or services.

This can see less demand for your business, and in turn see the company hire less workers.

With this in mind, the Business Council of Australia is urging Australian lawmakers to be mindful when altering the way we set people’s wages.

But while alterations are indeed appearing necessary, the approach is of course still up for debate, with Labor Leader Bill Shorten keeping his realism blinkers on during his quest for a ‘living wage’.

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Shorten’s quest for raises

As reported by the Australian Associated Press, Shorten has declared that the next federal election — set for May this year — will be a ‘referendum on wages’.

He insists the country’s enterprise bargaining system needs a complete overhaul. His understanding is that the current system is disadvantaging the conscientious companies who are trying to conduct fair negotiations with their employees.

Shorten believes these companies are undercut by new entrants who will only pay the industry award wage…and will therefore have more in the piggy bank for company growth.

While the Labor leader has fallen short of promising that ‘living wage’ he’s been advocating for months, an increase of the minimum wage is still on the agenda.

For this to be done, Shorten is calling on the independent Fair Work Commission to reconfigure the minimum wage algorithm.

But Business Council of Australia CEO Jennifer Westacott says the current system for determining the minimum wage is very effective.

If it ain’t broke…

While Westacott accepts that the current enterprise bargaining system needs to be fixed, she isn’t convinced it needs a complete revamp.

In her view, too high a rise of the minimum wage will only add to Australia’s economic woes. Westacott told ABC Radio National on Thursday:

What we’ve got to do is make sure that we don’t create a sugar hit in the economy and then see that the result of that, particularly in small business, is less people working or higher prices for consumers.’

Keep in mind, Ms Westacott shares Shorten’s opinion that Australian wages do need an increase. She’s just more level-headed and pragmatic about the approach.

The enterprise bargaining system has helped wages grow among those signed under such deals. The wage price index grew by 2.3% over the 12 months to December.

Now if there are things that need fixing in it, and I think there are…let’s get that right. But let’s not throw the baby out with the bathwater,’ Westacott said.

Morrison’s two cents on wage growth

Current PM Scott Morrison is still of the mind that Labor is shouting empty promises.

Wages growth will come with economic growth,’ he told reporters in Perth, pointing at the fact that a boost in pay packets will do nothing in the face of higher tax rates.

It’s a tough scale to balance, but it’s one that needs balancing.

Hopefully we find the right person for the job.

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The Australian Tribune Editorial

The Australian Tribune Editorial

The Australian Tribune is an unorthodox news service. Your Australian Tribune editorial team deliver the unfiltered stories that could impact your daily life — political and economic stories you’re unlikely to get anywhere else. And we’re not afraid to step on some toes to do it. We are honest, conservative and never dull. We are an independent service, meaning we don’t answer to shareholders or outside advertisers. This helps avoid conflicts of interest that inhibit mainstream sources, which keeps our voice independent. The Australian Tribune is owned and operated by Port Phillip Publishing.
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