Minimum wage freeze will put downward pressure on salaries

Business groups have welcomed the decision of Fair Pay Commissioner Professor Ian Harper to keep freeze the minimum wage for 12 months, saying the decision is justifiable given the state of the economy.

The decision is likely to put pressure on wages across the board, with the Australian Retailers Association calling on State Government bodies, which are due to hand down decisions on state awards in the coming months, to follow the Fair Pay Commission’s lead.

Unions had sought a $21-a-week rise in the minimum wage, but Harper kept it at $543.78, saying any rise would have added to rising unemployment.

“Our primary focus has been on jobs,” Harper says. “This decision is a decision for low-paid workers whose employers really would have no choice…but to cut back on the hours those workers are given each week or, in the worst case, to let them go.”

Employer groups agreed.

The Australian Chamber of Commerce and Industry, which had argued in its submission to Harper that low paid workers had benefited from tax cuts, higher family payments and Government handouts, said the Fair Pay Commission had no choice but to freeze.

“To do otherwise, would have imposed a higher wage and labour cost burden on hundreds of thousands of small and medium businesses, which would weaken their ability to maintain viability and jobs during the current global economic downturn.”

Despite the Rudd Government stating that it is determined to protect jobs through the downturn, Deputy Prime Minister Julia Gillard said she was “disappointed” with the Fair Pay Commission’s decision.

“This decision inevitably means that there will be a real wage reduction for low-income Australians.”