Government, bosses add insult to injury over minimum wage

April 8, 2017

As if the decision to cut the penalty rates of around 700,000 low paid workers in the retail, hospitality and fast food sectors wasn’t enough, restaurant bosses are now opposing any increase to the minimum wage.

In their submission to the 2017 Annual Wage Review, Restaurant and Catering Australia refused to support any increase, claiming that minimum wages in Australia “are extremely high..." In reality, Australia’s minimum wage is just $17.70 an hour or just under $35,000 a year for a full time worker — much less for a worker desperate to get more hours to make ends meet.

The federal government is arguing for “wage flexibility” during a period of “ongoing structural adjustment in the economy”. (Read: wage restraint to shore up profits after the mining and construction boom.) It is relying on spurious arguments that an increase in the minimum wage would restrain job creation and that “low-paid employment is an important ‘stepping stone’ to sustained employment and higher paying jobs”.

The outrageous statement in its submission that “increasing the national minimum wage is not an efficient way to address relative living standards or the needs of the low-paid” was trumped by the assertion in its submission that “low-paid employees are often found in high-income households.” (emphasis added) Perhaps it was the servants in Uncle Scrooge’s mansion that the government had in mind?

The Australian Retailers Association’s submission argued that the minimum wage should increase by only 1.2% and the National Farmers Federation said an increase of “up to 1% is appropriate” — both are below the rate of inflation, which sits at 1.5%. The Australian Industry Group wanted a 1.5% increase.

Against employer groups and the federal government stand the unions and the Australian Council of Social Services (ACOSS). The ACTU is arguing for a $45 a week increase, to address the shrinkage of the minimum wage compared with the average wage and the cost of living.

ACTU secretary Sally McManus made this point in her National Press Club speech on March 29: “In 1985 the minimum wage was nearly two-thirds of the average wage. Today it is well under half.

“This is dangerous for two reasons: it creates a class of the working poor as exists in the US, and a low minimum wage provides a big incentive for employers to destroy good, steady fairly paid jobs by outsourcing them, cancelling agreements and using labour hire."

United Voice, which covers workers in the hospitality sector, supports the accelerated adoption of a target of 60% of median wages for the National Minimum Wage, and failing that, an increase to $20 an hour or $87.30 a week.

The Shop, Distributive and Allied Employees' Association (SDA) is seeking an additional 10% on top of the ACTU’s claim "aimed at addressing the adverse impacts on the relevant employees due to the reductions of Sunday penalty rates”.

According to the ACTU, 2.3 million Australians and more than half of all hospitality workers, cleaners and laundry workers rely on the minimum wage.

The reality of a class of working poor was taken up by ACOSS in its submission, which said that based on the OECD-preferred measure of poverty (50% of median income) there were nearly 3 million people in Australia living below the poverty line in 2013–14, 32% of which came from households where wages were the main source of income.

Added to the pressures on minimum wage employees is that they are often working in industries where unscrupulous bosses exploit them, like the 430 employees of TV chef George Calombaris’ restaurant empire who were underpaid by an estimated $2.6 million.

Another impact on the minimum wage is that wages have been going backwards in real terms, at a time of increasing profits for business (some of whom have now been granted a massive cut in company tax by the Federal government). And no one can deny the relationship between declining wage growth and profit increases.

ABS data for the December 2016 quarter showed a 20.1% surge in profits, while wages fell by 0.5%. The resources sector accounted for the lion’s share of profits ($9 billion of the $13 billion total), but even mainstream economists like JP Morgan’s Tom Kennedy recognised that a “precarious combination of weaker wage growth, fewer hours, and elevated underemployment," accounted for some of the rise in profits in the non resource sector.

ACOSS is calling for a “substantial increase” in the minimum wage and for minimum wages to be compared to benchmark indicators of a “decent basic living standard” for a single adult, together with the wages needed (along with relevant social security payments) to ensure that low-paid families with children are free from poverty.”

As the ACOSS submission points out, low income families have been hit hard by government cuts to social security entitlements. Between 2009 and 2016 the Labor and Coalition federal governments cut $12 billion in payments for families with low incomes, including cuts to family tax benefits, cuts in payments to sole parents and abolition of the schoolkids bonus.

A minimum wage for Australian workers was won in 1907. Unemployment benefits were introduced in 1945, only 70 years ago. All the gains achieved for workers were not won without a fight and it will take struggle to defend them today against greedy employers, backed up by both Labor and Coalition governments, who are prepared to drive workers and the poor into the ground in order to shore up the profits of the rich.

Like the article? Subscribe to Green Left now! You can also like us on Facebook and follow us on Twitter.

You need Green Left, and we need you!

Green Left is funded by contributions from readers and supporters. Help us reach our funding target.

Make a One-off Donation or choose from one of our Monthly Donation options.

Become a supporter to get the digital edition for $5 per month or the print edition for $10 per month. One-time payment options are available.

You can also call 1800 634 206 to make a donation or to become a supporter. Thank you.