This week the election campaign has turned to discussion about the increase to the minimum wage, with suggestions that an increase either in line with the curent rate of inflation of 5.1% or marginally above it (such as the ACTU’s proposal of a 5.5% increase) would bring about a return to 1970s style wage sprials.
Labour market policy director, Greg Jericho, in his column in Guardian Australia, however notes that wages should grow faster than inflation, and so long as real wages are not outpacing productivity growth then such rises are not exerting any inflationary pressure. He also shows that given the recent estimates for inflation by the Reserve Bank, a 5.1% increase would not be enough to prevent the minimum wage falling in real terms over the next financial year.
The problem is not that wages have been fuelling inflation, but that for the past 20 years real wages have risen slower than productivity.
We need to change the debate from a reflex that assumes low wages is the ideal to realising that given workers are the economy they should be rewarded fairly for their efforts and improvements in productivity.
You cannot say the economy is healthy if real wages are falling, and most certainly not if the lowest paid in Australia are seeing their living standards decline.
Between the Lines Newsletter
The biggest stories and the best analysis from the team at the Australia Institute, delivered to your inbox every fortnight.
You might also like
Analysis: Will 2025 be a good or bad year for women workers in Australia?
In 2024 we saw some welcome developments for working women, led by government reforms. Benefits from these changes will continue in 2025. However, this year, technological, social and political changes may challenge working women’s economic security and threaten progress towards gender equality at work Here’s our list of five areas we think will impact on
Does leave for menstruation and menopause advance women’s rights and gender equality at work?
As pressure grows for action to establish new work rights, including additional leave, for those who experience menstruation and menopause, the Centre for Future Work’s Senior Researcher, Lisa Heap, canvases the debate about whether these rights will advance gender equality at work.
Closing Loopholes Protections, Including Right to Disconnect, Come Into Effect 26 August
New labour rights coming into effect on 26 August, including the ‘Right to Disconnect’.