Published 28-04-2021
| Article appears in June 2021 Issue

Wage rise stimulus arguments don’t add up, says Ai Group in submission

28-04-2021

The peak national employer organisation representing business has rejected arguments that an increase in the minimum wage would have a similar positive effect on the economy as government stimulus payments.

"This argument has substantial flaws and should not be accepted by the Expert Panel of the Fair Work Commission,” said Innes Willox, Group Chief Executive of the Ai Group.

Mr Willox made these comments in his organisation’s second submission to this year’s Annual Wage Review, in which he also argued for a delay in the operative date for any potential pay increase for employers in distressed sectors

"Unlike stimulus payments, rises in minimum wages are paid by businesses and other employers and therefore involve a diversion of money from employers to those households which receive higher wages because of the minimum wage decision,” continued Mr Willox.

"Because there is no additional money injected into the economy from an increase in minimum wages, there is no comparability between stimulus payments made by governments and rises in minimum wages. One is stimulus; the other is a transfer within the economy. They are chalk and cheese.

"We also propose a delayed operative date of 1 September 2021 for any wage increase in Group 2 awards. Last year, the minimum wage increase for these awards was delayed by four months. This year, we propose a delay of two months. This would facilitate a smooth transition to a 1 July operative date for any minimum wage increase next year, if there are no ongoing 'exceptional circumstances'.”

Mr Willox proposed an operative date of 1 January 2022 for any wage increase in Group 3 awards. He said the industries covered by these awards continued to be adversely affected by the pandemic, and the 1 February 2021 delayed operative date for these awards in last year's ‘Decision’ would otherwise result in employers being required to pay two wage increases in close succession.

"Contrary to the false assertions of the ACTU, Ai Group has not yet proposed a quantum for any minimum wage increase. Our view is that the impact of the discontinuation of the JobKeeper scheme from 28 March 2021, including the extent of job losses and business closures, is not yet clear. For this reason, Ai Group will advise the Expert Panel of our position on any minimum wage increase in the round of submissions due on 14 May 2021. This will enable Ai Group to assess the latest economic data before settling on a proposed quantum for any minimum wage increase.

"The 3.5 per cent minimum wage increase proposed by the ACTU is obviously unsustainable. Such a minimum wage increase is incompatible with the current economic vulnerabilities and would put jobs at risk and worsen unemployment and underemployment," Mr Willox said.

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