The federal government has recommended that the minimum wage increase in line with annual inflation, which sits at 3.4 percent in the year to January.
While the decision will be made by the Fair Work Commission as part of its annual wage review, Treasurer Jim Chalmers said, “the [government’s] expectation is that the minimum wage will be lifted.”
He told the Today show that Labor wanted to ensure Australia’s low-paid workers “do not go backwards” and that it recognised that cost-of-living pressures “do fall disproportionately on the lowest paid in our workplaces.”
“While we’ve made welcome progress on inflation and seen a return to real wages growth earlier than forecast, many Australians are still under pressure, particularly low-paid workers,” he said.
Government Denies Inflation Risks
In terms of the inflationary risk from rising wages, the submission makes clear that the government is not advocating for across-the-board wage rises.“Inflation is coming off a fair bit in our economy but it’s not mission accomplished yet,” Mr. Chalmers said. “[But] we don’t have this inflation challenge in our economy because the lowest-paid Australians are earning too much. I think that’s really clear.”
A rise in the minimum wage was a better way to help low-income earners than a reduction in interest rates, he argued, which would only benefit those with a mortgage.
“Inflation has been coming off, unemployment went down in the figures last week at the same time as we got real wages growth in our economy for the first time in years,” Mr Chalmers said.
“And one of the reasons ... why wages are moving again in our economy ... is because of the way that the Fair Work Commission has granted a couple of decent pay rises for the low-paid, and we want to see that again.”
He said the Fair Work submission was just part of a suite of measures aimed at helping struggling households, such as the 117,000 that have fallen into electricity hardship.
“Since the middle of last year, electricity has gone up about three and a half percent,” Mr. Chalmers claimed. “Without our energy plan, it would have gone up more than 18 percent. And so what that shows is we recognise people are under pressure.”
The government recommendation will form part of its submission to the review, which will argue that raising the minimum wage could increase the workforce participation rate for women.
