This week the Fair Work Commission jacked the minimum wage 3% from$622.20 a week to $640.90 a week and that triggered a wave of hand-wringing among the loon pond, egged on by Treasurer Joe Hockey about competitiveness and lost jobs. The SMHblog has dug up a nice chart showing we are expensive at the bottom end of labour:
In PPP terms only Luxembourg and France were higher.
At MB we’ve been far ahead of the curve on the issue of competitiveness and calling for the real wage declines for sometime so, in principle, the wage rise by the Fair Work Commission works against that.
However, the issue is much broader. It’s no good for millionaires and billionaires to get up and whinge about it. If you need to freeze minimum wages in the name of competitiveness then you need to freeze all wages in the name of the same project and to make the project equitable enough to sustain it.
Indeed, simply picking on the low-income earners will turn you inexorably into the United States where so much wealth and income is now concentrated in so few hands that they have a persistent demand deficit for the very products that the wealthy produce. Making the poor carry the brunt of an adjustment to competitiveness adjustment is a recipe for hollowing out the classes with the highest marginal propensity to consume.
The adjustment must be carried equitably across income groups, otherwise this is just another class war masquerading as national interest policy.
