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Living wage ‘would drive up unemployment’, employers warn

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While the comments have been welcomed by the Australian Council of Trade Unions – which has been lobbying for a “living wage” to ensure that “nobody should work full-time and live in poverty” – employer groups say the move would backfire.

“To put it simply, forcing higher wages on employers with no return would only serve to push people out of work and lessen the opportunities for young Australians to enter the workforce,” Australian Industry Group chief executive Innes Willox said.

Mr Willox said any policy levers aimed at boosting wages – which all sides of the debate agreed was needed – should also support the creation of new jobs and lift the pace of productivity growth.

“In view of the slowdown in the economy since the middle of last year and as shown in today’s disappointing GDP data, there is a real risk that driving up wages with no compensatory measures to drive job creation … would bring the period of strong workforce growth to a screeching halt.”

The commission increased the minimum wage by 3.5 per cent last year, ahead of the then inflation rate of 2.1 per cent, in a move welcomed at the time as “a step in the right direction” by Ms McManus.

The ACTU has lobbied for a living wage to be set at 60 per of the median wage, a change that would have seen the then-minimum wage of $695 a week jump to $852.

Opposition industrial relations spokesman Brendan O’Connor said Labor would have “more to say in the lead up to the election”.

Ms McManus said Australia must introduce a living wage if it did not want to end up like the United States, “where teachers and even pilots have to work two jobs just to survive”.

Australian Council of Social Service chief executive Cassandra Goldie said raising the minimum wage – along with Newstart – “must be a top priority for the next government”.

NSW Business Chamber chief executive Stephen Cartwright said hiking wages independent of productivity risked making businesses uncompetitive in a global market.

Dana is health and industrial relations reporter for The Sydney Morning Herald and The Age.

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