But ADF pensioners, DFRB, MSBS and DFRDB recipients and disability veterans will just continue their rearward march... at a now increased pace.
03 june 2010
By RACHEL PANNETT
CANBERRA—In a victory for unions, Australia's new independent workplace-relations tribunal said Thursday it will raise the country's minimum wage by 4.8% to 569.90 Australian dollars (about US$485) in early July.
The decision raises the wage rate paid to the country's lowest paid workers to A$15 an hour. It falls just A$1 short of calls by organized labor for a pay rise of A$27 a week.
But it has angered business groups that had lobbied for a more measured rise as small businesses in particular shake off the effects of the recent global financial crisis.
"This decision has nailed the coffin in on small business and thousands of jobs for working Australians," said Scott Driscoll, national president of the United Retail Federation lobby.
It also alerts the Reserve Bank of Australia to potential wage pressures, especially as economists expect the engines of the A$1.2 trillion economy to fire-up fully later in 2010 as a mining boom sparks recovery. The central bank monitors wage growth as a bellwether for the broader inflation outlook.
Interest rates have been raised six times since October, taking the cash rate target to 4.5%, amid rising concerns about inflation. Unemployment in April was 5.4%, close to what Treasury considers full employment. Consumer price index inflation was running at 2.9% in the first quarter compared with a year ago—already at the top of the central bank's 2%-to-3% target band.
The proportion of Australian workers on the minimum wage is relatively small—1.4 million people, or a little over 10% of the working population. But business groups, especially retailers, worry the ruling could set a precedent, driving up wage demands across the broader economy.
Last year, the minimum wage rate was held steady in recognition of uncertain times for the economy.
"While a case existed for a modest increase, this decision goes well beyond what was responsible or justified," said Greg Evans, director of economics and industry policy at business lobby the Australian Chamber of Commerce and Industry, adding that many small businesses "will be left reeling".
But Geoffrey Giudice, president of the Fair Work Australia tribunal, said the increase was justified because real prices have risen in the economy while minimum wages haven't.
"There is a strong case for a rise in minimum wages to provide a fair and relevant safety net to protect the relevant living standards of [low-wage] employees," he said.
Deputy Prime Minister Julia Gillard said the decision was "economically responsible and fair."
The Australian economy grew at a much slower pace in the first quarter than at the end of last year as the withdrawal of economic stimulus, surprising weakness in business investment and sluggish growth in export volumes took some of the steam out of activity, according to official gross domestic product data released Wednesday.
But economists say the moderation will be short-lived as companies continue to plan significant investment, especially in the mining sector, while a substantial upswing in commodity prices is already washing through the economy.
—Alex Wilson in Melbourne and James Glynn in Sydney contributed to this article.
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