Hospitality worker
Unions are seeking a five per cent minimum wage increase for the nation's lowest paid workers. Image by Dan Peled/AAP PHOTOS
  • politics

Ai Group backs minimum wage increase of 2.8 pct

March 27, 2024

Another major employer group has dipped into the annual minimum wage debate and recommended a pay boost of no more than 2.8 per cent. 

Australian Industry Group, which represents more than 60,000 businesses, outlined its position on Wednesday after the peak union group called for a five per cent pay bump across awards and minimum rates. 

The decisions in the annual wage review affect about a quarter of Australian employees, including those on industry and business specific awards and a smaller cohort on the minimum rate of pay.

Group chief executive officer Innes Willox said the Australian Council of Trade Union’s five per cent proposal was “reckless” and would put the nation’s future employment, inflation and interest rate paths at risk.

Ai Group chief executive officer Innes Willox.
 Ai Group CEO Innes Willox says the ACTU’s five per cent pay rise proposal was “reckless”. Image by Mick Tsikas/AAP PHOTOS 

“An increase of less than 2.8 per cent would lower the likelihood of negative impacts on employment and raise the likelihood of an earlier reduction in interest rates by lowering the inflationary pressures that would flow from a higher increase,” Mr Willox said.

The industry group’s recommendation for the national minimum wage exceeded the two per cent maximum increase favoured by the Australian Chamber of Commerce and Industry.

Mr Willox said in practical terms, a 2.8 per cent lift would deliver a real increase in the disposable incomes of many workers when combined with upcoming tax relief and bolstered government supports.

Yet the federal government’s submission, expected in full on Thursday, will argue the stage three tax cuts should not be viewed as a substitute for wage boosts.

The Commonwealth will also assert it does not want the real wages of the nation’s lowest-paid workers going backwards, suggesting it wants the industrial umpire to factor in cost of living pain felt by lower income households.

And while the government does not suggest wages across the board should automatically increase with inflation, it also says there is no sign of a wage-price spiral developing.

The ACTU has also stressed the toll of inflation on workers on awards, saying it has left them more than $5000 worse off, even when accounting for their pay rises over the past three years.

Unions have also rejected the suggestion their bigger pay boost for minimum and award workers would be inflationary.

The independent workplace relations umpire has started its annual wage review this week and has begun hearing from employers, unions and governments on the matter.

Last year, the industrial umpire effectively delivered a bigger pay rise to the minimum wage workers, which made up 0.7 per cent of the workforce at the time than the 20 per cent covered by minimum award rates.