National Fair Work Commission and the Australian minimum wage

I do wish that the Fair Work Commission had not raised the Australian minimum wage. For the benefit of international readers, the wage was raised by 3 per cent. From 1 July 2014, the national minimum wage for a full-time adult employee aged 21 or over will be $640.90 per week or $16.87 per hour.

Don’t get me wrong, I support the concept of a reasonable minimum wage as a safety net and to avoid some of the problems that we have seen in countries such as the US. However, I found this Increase and some of the union comment on it quite problematic.

The minimum wage is not the same as the old Australian basic wage. That was calculated on the basis of the amount a male bread winner needed to earn to support a wife and kids. The minimum wage is a totally different concept, It is the minimum that employers must pay to adult workers of all types. There are lower rates for younger workers. Put the rate too high and you reduce employment opportunities. Put it too low, and you create employed poverty.

It is also a wage that covers a variety of ages and occupations. For many, its is the wage now on the way to a better wage. For others, it is the maximum wage. These are two very different groups. You have to get a balance between them. 

Maintaining a minimum wage does not  say anything about award conditions in other areas, although having a minimum wage creates a base for all awards. You could abolish all awards and still have a minimum wage. You could abolish the minimum wage and still have awards. They are separate questions.

The Commission's decision sets out its reasons for mandating the increase. I think that the Commission is wrong. If you increase the minimum wage at a time when the economy is actually soft and the unemployment projected to rise, then you are likely to increase unemployment. 

I also think that it has been unwise. As  see it, the first challenge at the moment is to ensure the survival of a minimum wage, the second to ensure a reasonable level to that wage. I wouldn’t count on either just at present.