Minimum wage decision will put job protection ahead of pay

The person responsible for setting Australia’s minimum wage, Fair Pay Commission chairman Ian Harper, says he will be guided by the need to protect jobs when he decides whether to raise the minimum wage in 2009.

The person responsible for setting Australia’s minimum wage, Fair Pay Commission chairman Ian Harper, says he will be guided by the need to protect jobs when he decides whether to raise the minimum wage in 2009.

While Harper boosted the minimum wage by $21.66-a-week in 2007 and $26-a-week in 2006, employers will be keen to see pay levels kept in check given Australia’s rapidly slowing economy.

Harper admits this year’s deliberations will be extremely difficult, given the competing forces of the economic downturn and rising inflation, which remains at around 4%.

“You’ve got the worst of both worlds. You’ve got inflation still rising – which is undermining people’s purchasing power in the usual way – and you’ve got unemployment rising because the economy is slowing,” Harper told The Australian.

“We can get caught either way. If we put the minimum wage up too high, that can induce employers to sack people. If we don’t put the minimum wage up fast enough, people leave the labour force and go on to the unemployment rolls.”

But Harper’s stance has been dismissed by union officials, who argue that the country’s lowest-paid workers should not bear the brunt of the financial crisis and links should not be made between employment and minimum pay.

Harper is calling for submissions to the pay review by the end of March and then will take into account any new policy directions from the federal budget (such as increases in unemployment benefits) in May before announcing his decision in June.

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