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Budget relief means minimum wage moderation: Ai Group

21 May 2024
budget relief means minimum wage moderation ai group

In a fiery teardown of the ACTU’s proposed award hikes, Ai Group CEO Innes Willox has called for wage increases to be mindful of budgeted income support.

National employer association Ai Group said award and minimum wage increases this year should not exceed 2.8 per cent given budgeted income support measures, including energy bill relief and boosts to Commonwealth Rent Assistance.

“These measures ensure a real increase in the disposable income of employees on minimum and award wages,” said Innes Willox, Ai Group CEO.

“The Annual Wage Review Panel should take a cautious and moderate approach to increase award and minimum wages by not more than 2.8 this year.”


The minimum wage is currently $23.34 per hour after it was increased by 5.75 per cent last July. While budgeted relief was cited as the reason for the modest wage increase, the group has been calling for a 2.8 per cent hike since before the budget was released.

In its post-budget submission to the Annual Wage Review, Ai Group said key economic indicators released in May – including above-target inflation, a weak labour market, a frail retail sector, and RBA and Treasury forecasts of subdued growth in key macroeconomic indicators – suggested a weakening economy.

“In line with these deteriorating economic circumstances, it remains critical for the Panel to adopt a cautious approach to adjusting wages. A minimum and award wage increase not above 2.8 per cent would avoid unduly exceeding business capacity to pay, thus contributing to disemployment, in the current environment,” the group said.

“It would also avoid unreasonably contributing to the persistence of inflation. In light of current inflation forecasts, and the Government’s announced income support measures, it would also ensure a real increase in the disposable income of employees on the [national minimum wage] and [modern award minimum wage].”

Willox is not alone in advocating for budget support measures to be taken into account when reviewing wages. He cited former ACTU secretary Bill Kelty as saying last week, “If you’re giving energy relief and rent relief then the minimum wage is likely to be lower.”

The group took shots at the more ambitious minimum wage hikes called for by the ACTU, which Ai Group referred to as “misguided and eleventh-hour.”

In a reply submission to the Annual Wage Review, the ACTU advocated for increased award rates for certain occupations to tackle gender-based undervaluation of work.

Should the ACTU get its way, selected occupations would get an initial lift of 9 per cent in award rates.

In response, Ai Group quoted the commission as previously advocating against differential treatment on an award-by-award basis in terms of minimum wage setting.

“Ultimately, the reckless granting of unsustainable wage rises proposed by the ACTU would not only harm the employers impacted but also their employees and the broader economy and community given the crucial sectors caught by the union proposal,” said Willox.

“If the Commission is minded to further consider issues associated with gender equity, it should initiate separate proceedings that are directed towards this issue. It should not be dealt with further in the 2024 [annual wage review].”

The ACTU doubled down on its advocacy for a 5 per cent increase in the national minimum wage and minimum award wages in its reply submission.

In response to the Ai Group, Treasurer Jim Chalmers said the cost-of-living relief in the budget was “additional” to wage increases.

“We want to see a decent pay increase for minimum wage workers on top of the government’s efforts to ease people’s cost of living,” he told the ABC over the weekend.

The government, which is not responsible for setting wages, submitted that an increase should at least keep pace with inflation.

Industry groups were quick to shoot down the government’s proposed minimum wage and award increases when they were first proposed in March.

The Australian Retailers Association, which advocates for more than 120,000 retailers, pushed for a 3.1 per cent minimum wage increase. In making its case, it said any increase should “be considerate of the impact of the stage 3 tax cuts.”

Stage 3 tax cuts deliver the greatest relief to those on the lower end of the income scale. ACCI said the benefits to low-income households “should also be factored into the AWR decision.”

Chalmers has defended the government’s advocacy for a minimum wage increase, claiming that tax cuts and minimum wage hikes were independent levers for cost-of-living relief.


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