Industrial News 2005

May 2005

The AIRC must set our living wage

The Australian Industrial Relations Commission (AIRC) commenced hearing an application by the ACTU to review federal minimum wage levels, commonly referred to as the Living Wage Case, but this could be the last time this occurs.

The ACTU application asks the AIRC to review the level of the minimum wage, taking into account what would be fair when weighing up the needs of employees and employers in the current economic circumstances.

This has been the responsibility of the AIRC for around 100 years, following the 'Harvester Decision' in 1904. This decision established a minimum weekly wage for an adult male full-time worker who was married with two dependent children.

While this 'traditional family' stereotype is not as relevant in 2005 as it was in 1904, the protection of a fair minimum wage remains relevant to most working families.

In response to lobbying from employer groups, the Australian Government is set to announce dramatic changes to the way minimum wages are established and reviewed.

Employer groups have campaigned for a reduction in minimum wages, arguing that a reduction will improve global competitiveness and boost employment levels.

But this argument focuses on Australia's economic needs, and completely ignores the right of any employee to maintain a reasonable standard of living through their wages.

Experience overseas has shown that when minimum wages are reviewed in purely economic terms, employees are disadvantaged. The USA is a clear example. While the USA considers a number of factors when establishing their minimum wage, none take into account an employee's need to maintain a decent standard of living.

In Ohio, the current minimum hourly rate is $4.25 per hour, but for employers whose gross sales are between $150,000 and $500,000 per year, the minimum hourly rate is $3.35 per hour. For employers with gross sales under $150,000 per year, it is $2.80 per hour.

This is the type of inadequate economic approach the Howard government wants to move towards, and it will be a disaster for employees who rely on the minimum wage: a minimum wage must take into account a person's standard of living and their ability to access basic goods and services. This cannot be determined solely on economic grounds.

Workplace relations minister Kevin Andrews is on record as saying he thinks minimum wages in Australia are set about $70 a week too high. 'This means that he thinks people who work full-time, including nurses, hospitality workers, cleaners, and sales assistants, should be paid less than $400 a week. This is less than $10.50 an hour.

It is estimated that over 1.5 million workers in Australia receive the minimum wages. The majority of these are women who work part-time. In nursing, which is a predominantly female occupation, 53.7% of nurses work part-time. In aged care, 89% of nurses work part-time.

It is estimated that approximately 25% of nurses, predominantly those working in the aged care sector, are covered by awards and are dependent on the AIRC Living Wage Case decisions for wage increases.

Nurses who are paid under awards not only miss out on the superior wages and conditions contained in enterprise bargaining agreements, but must rely on the relatively small increases in wages awarded by the AIRC to achieve any pay increase necessary for maintaining basic living wages.

If the AIRC is no longer setting the minimum wage, it is inevitable that the increases will be smaller and will not occur every year as they do now.

The ANF maintains that employer groups and the government have failed to provide convincing evidence that the AIRC lacks economic rigour when setting the minimum wage and that moderate increases in minimum wages cause job losses.

Overseas comparisons show this not to be the case. For example, over the past five years, minimum wages have grown by a modest 2.9% in real terms in Australia, but have fallen by nearly 12% the USA. In the same period, jobs growth in Australia has outstripped the USA by more than three jobs to one.

Many nurses rely on the AIRC minimum wage decisions, and it is crucial that the AIRC is able to continue with this important responsibility

Nick Blake
ANF Federal Industrial Officer