Minimum wage rise of 5.1 per cent will not automatically lead to other similar wage rises: Professor Ian Harper

The Australia Institute’s Centre for Future Work director, economist Jim Stanford, said it wasn’t “uncommon” for unions to be preparing demands for 5 or 6 per cent, adding costs of living demands would rekindle workers’ interests in collective bargaining and industrial action.

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“I imagine a lot of bargaining tables saying ‘we should try for 7 per cent because that’s what we’re going to need to protect the real wages of our members’,” Stanford said, but agreed with McManus that inflation fears didn’t reflect the nature of a severely weakened bargaining system, due in part to the dwindling number of people on such agreements.

McManus said employers’ calls for constraint were part of a campaign designed to keep wages low: “One-off pay rises also do not change the fact that our bargaining system has stopped delivering wage growth for working people.”

“If inflation returns to normal levels then that will obviously influence what increases unions are fighting for, but right now working people cannot continue to see real pay cuts after a decade of record low wage growth,” she said.

Business and employer groups, and a slew of economistshave said wage rises above 5 per cent would be another burden for businesses juggling greater energy costs, supply difficulties and fuel prices, and these costs would inevitably be passed to households.

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But Harper said the commission’s June 15 decision to increase the national minimum rate to $21.38 an hour was “unsurprising” as it was making up lost ground in the falling wages of Australia’s lowest paid, while setting a smaller rate of increase on people in higher industry award categories.

“The Fair Work Commission sets the minimum classification wages for all awards, that’s the closest we get to a system-wide movement of wages,” Harper said.

However, the Howard-appointed inaugural chairman of the Australian Fair Pay Commission said the Fair Work decision still raised questions about the impact of employees’ pay expectations, saying the RBA was undertaking surveys.

“It depends on whether people take the argument that I just put, that it’s a one-off adjustment … or whether they think, ‘this is now the beginning of a spiral’, and adjust expectations accordingly,” he said.

Tim Harcourt, a University of Technology, Sydney, economics professor and former Fair Work minimum wage panelist, projected agreements via enterprise bargaining would see a 4 per cent wage increase by the end of the year, compared to 2.6 per cent in the 2021 December quarter.

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