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August
2004
Fair
minimum wages: the high road or the low road?
The
current federal government is attempting to reduce the capacity
of the AIRC to focus on the needs of workers when it establishes
a minimum working wage. Nick Blake explains why this is
the wrong road for Australia.
It was depressing to read recently that a number of multinational
companies based in the USA had embarked on a campaign to convince
the USA Government to legislate against minimum wages.
The argument advanced by these companies is that minimum wages
set by law restrict companies from competing in a global market
and are an unnecessary interference by government on an issue
that should be determined between employees and employers.
In the USA today, minimum wage levels are set at $5.15 per hour
(ie. $206.00 per week or $10,712 per year). This amount was determined
in 1997 and has not changed for the past seven years.(1)
Legislation currently before the USA House of Representatives
seeks to increase the minimum hourly rate to $7.00 per hour,
but USA employers are strenuously resisting this.
In most industrialised countries, minimum wages are fixed by
law because it is generally accepted by governments of all persuasions
that a weekly wage is the main determinant of an individual's
or a family's standard of living and therefore has an important
social dimension.
Similarly the establishment and maintenance of minimum wages
assists low paid workers meet basic living costs and is designed
to act as a buffer against wage inequality.
In Australia, the Australian Industrial Relations Commission
(AIRC) has a statutory obligation to protect and promote the
economic prosperity and welfare of workers by reviewing wages
and working conditions in awards.
The AIRC conducts an annual review of the Australian minimum
wage, usually through a 'Living Wage Case.'
In a 'Living Wage Case', the AIRC looks at the minimum weekly
wage level to be paid to an adult employee working 38 hours per
week, Monday to Friday. The current minimum wage rate in Australia
is $12.30 per hour (or $467.40 per week).(2)
Even with careful management, most people would acknowledge that
a gross wage of $467.40 per week is below a level required to
enable a single person to live in modest comfort, let alone a
family.
And with the move toward casual and part-time employment, most
employees paid at the minimum wage rate would not even earn $467.40
per week.
Despite the failure of minimum wages to provide for a decent
standard of living and a fair reward for labour, the federal
government is now attempting to constrain the AIRC in the way
it determines the minimum wage.
It has introduced the Workplace Relations Amendment (Protecting
the Low Paid) Bill 2003 which requires the AIRC to make decisions
about the minimum wage based on:
- the
needs of the low paid;
- the
employment prospects of the unemployed; and
- the
capacity of employers to meet increased labour costs.
At
first glance this may seem benign, but the primary purpose of
this change in focus is to reduce the number of employees protected
by minimum wage reviews and to require the AIRC to give much
greater weight to the impact of wage increases on employers.
The Bill also reflects a government view that any job is better
than no job, and that minimum wages discourage employment.
If this legislation is enacted, the ANF considers it will significantly
increase levels of poverty in Australia and further weaken our
system of fair and relevant awards.
One only needs to look to the USA, where the minimum wage has
been neglected and is now so low it no longer offers any protection
for workers.
As a consequence, the USA has introduced the term 'the working
poor' to describe people who are in the workforce but are living
below the poverty line.
Many of these workers work two jobs at the minimum hourly rate
in their struggle to meet their basic needs. It is difficult
to envisage a more disheartening situation in a person's working
life.
Most of us are not going to win Tattslotto (although we keep
buying tickets!) nor inherit a fortune from a mysterious aunt,
so our labour will determine our standard of living while in
the workforce and during our retirement. As such, wages cannot
be left to the vagaries of the marketplace or the whims of employers.
Therefore, all working people, whether they are well or poorly
paid, must demand their government establish and protect a minimum
wage to ensure employment is attractive and the rewards for working
are fair.
We must take the high road and return to that great Australian
principle of a 'fair day's pay for a fair day's work', and reject
the low road that disregards the basic needs of workers and allows
wages to stagnate or decline.
Notes
1 Further details may be found at www.unionvoice.org/campaign/minwageseiu
2 National Wage Case PR002004, May 2004 |
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