The ACTU has argued that a 5% increase in the minimum wage is needed in 2022 in response to the rising cost of living.
However, the Australian Retailers Association used its submission to the Fair Work Commission’s annual wage review to argue that any increase in the minimum wage should be in line with the underlying inflation rate, which was 3.7% in the March quarter.
Woolworths CEO Brad Banducci has backed the ARA’s view, saying its submission was balanced and well thought out. Wesfarmers CEO Rob Scott has also called for real wage growth, arguing that it is good for the economy.
From The AFR:
“Importantly, we want to acknowledge the cost-of-living pressures that are being felt by our customers and our team,” [Woolworth CEO Brad Banducci] said in an ASX statement announcing the company’s third-quarter results.
“We also support the Australian Retailers Association’s position for an increase in team member wages that keeps pace with underlying cost-of-living increases”…
“I should note that from a Wesfarmers point of view, I see real wage growth as a very good thing” [Wesfarmers chief executive Rob Scott said].
“Real wage growth is a good thing for the economy, and if it’s good for the economy, it’s generally good for Wesfarmers.”
Increasing the minimum wage in line with underlying inflation would merely ensure that real wages remain flat, and runs counter to Rob Scott’s claim that “real wage growth is a good thing for the economy, and if it’s good for the economy, it’s generally good for Wesfarmers”.
Moreover, annual headline inflation was 5.1% in March quarter. Thus, there is an argument that workers would actually be going backwards financially if the minimum wage was only increased by 3.7%; although the employee cost of living index rose by a smaller 3.8% in the year to March:
In theory, workers should be compensated for inflation plus any labour productivity. Viewed this way, the ACTU’s 5% wage claim is reasonable.
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