The Fair Work Commission’s 2021 Annual Wage Review is occurring in the context of the most uncertain economic outlook Australia has experienced in decades, and following a federal budget that projects weak wage growth across the economy for at least the next four years.
After the biggest economic shock in a century, economic activity is picking up, and the main government support programs, such as JobKeeper and the JobSeeker Coronavirus supplement, have been withdrawn. Unemployment is down, but 60 per cent of the jobs created in the last six months are casual, while less than a quarter are full-time. Underemployment and job insecurity remain a significant problem for the Australian labour force, as they were before the pandemic. Too many Australians are not working enough hours, or receiving adequate rates of pay, to sustain them and their families.
Businesses across the country are reopening and reinstating, or hiring new, staff. Some small businesses, particularly in the hospitality and tourism sectors in regional areas, are struggling to get back to full steam, while other larger businesses have banked record profits during the pandemic, with some even pocketing millions of dollars of government funding that was intended, via JobKeeper, to be paid as salaries to workers.
It is against this backdrop that employer groups and business lobbyists, with the support of the Federal Government, are now arguing against a much-needed increase in the minimum wage – despite the Government’s fiscal projections for economic recovery relying heavily on high levels of consumer spending over the forward estimates.
As this report demonstrates, it is imperative that low- and middle-income households receive adequate wage increases to compensate for years of wage stagnation and months of lost income: imperative not only for working Australians and their families, but critical to the task of lifting consumer confidence and spending needed to boost the revenues of small and medium enterprises across the nation.
Bringing together data from before and since the pandemic on wage growth trends, company profits, asset prices, consumer spending, the cost of living and consumer prices, and household living standards, this report outlines the case for a significant increase in the minimum wage, which will flow through to higher take-home pay for the more than 2 million Australian workers who rely on award wages.
Higher wages for low and middle-income earners translates directly to more consumer spending in local economies. As the Government’s own budget forecasts show, domestic consumption by private households is critical to supporting Australia’s economic recovery, and will play an even larger role in the health and growth of our economy until international border reopen and major export industries such as tourism and international education begin to recover to pre-pandemic levels.
A recovery that leaves working people behind is no recovery at all. If our goal is to restore economic growth that will support better living standards for all Australians, rather than simply increase headline growth rates and the wealth of those already doing well, an increase of 3.5 per cent in the minimum wage, to keep incomes just ahead projected cost of living increases over the coming year, is essential and must not be delayed.