Ai Group increases minimum wage recommendation to 2.5%

National employer association, Ai Group, has increased its minimum wage rise recommendation from 2% to 2.5% in its reply to the Fair Work Commission’s Annual Wage Review.

Each year the Fair Work Commission (FWC) reviews minimum wages. This involves receiving submissions from unions, employer associations, government and other stakeholders. By July 1 any increase ordered by the FWC’s minimum wage panel will be applied.

Ai Group initially called for a 2% minimum wage rise but has now revised that to 2.5% as cost of living rises and interest rates increase. This equates to an increase of about $19.30 per week in the National Minimum Wage, bringing it up to $791.30 per week and about $22.50 at the base trade level, Ai Group says.

Ai Group CEO Innes Willox called for the FWC to take a “cautious approach” in adjusting wages.

“Despite the changed economic circumstances, it remains critical for the FWC’s Expert Panel to adopt a cautious approach in adjusting wages. An excessive minimum wage increase would fuel inflation and lead to higher interest rates on mortgages, personal loans and credit cards than would otherwise be the case. Higher inflation and higher interest rates would have a particularly harsh impact on the low paid,” Willox said.

The ACTU initially called for a 5% minimum wage rise but has revised that up to 5.5%. This would see the minimum adult hourly wage rise from $20.33 to $21.45, the weekly rate from $772.60 to $815.09 and the annual rate from $40,175.20 to $42,384.84.

“(Prime Minister) Scott Morrison must act to support increases to the minimum and award wages to protect one in four working Australians from rising cost of living pressures. A 5.5 per cent increase is what is now needed just to ensure people tread water, anything less has them drowning in bills,” ACTU Secretary Sally McManus said.

The Australian Chamber of Commerce and Industry (ACCI) says a 5% increase would inflict further damage on small business. It is recommending a 3% minimum wage rise, which would bring the national minimum wage to $795.78 a week, up $23.18 from current levels.

“Imposing unaffordable wage increases on small business will cruel jobs, not create them.  An increase of five per cent or more would inflict further damage on small business, and the millions of jobs they sustain and create,” ACCI chief executive Andrew McKellar said.

“With already thin margins, businesses are being forced to pass on price increases to consumers.  As the Reserve Bank has warned, an excessive wage increase will trigger further inflation, increasing costs for consumers and businesses alike.”

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