Business alarmed as Shorten flags ‘living wage’ to replace minimum wage
The small and medium business sectors have expressed concern after Opposition leader Bill Shorten all but confirmed he will boost the minimum wage to a “living wage” should he win the next election.
Speaking to The Australian Financial Review Business Summit at which he declared the election to be a referendum on wages, Mr Shorten said the current minimum wage of $18.93 per hour failed to cover the basic costs of living and was consigning people to poverty.
The Opposition leader said the minimum wage did not take into account modern living expenses such as mobile phones, paying for water, the internet and energy costs. “The minimum wage is nowhere near a living wage,” he said.
Mr Shorten challenged the audience members to try and live on the current minimum wage.
“If you don’t want to live on it, why would you expect everyone else to live on it.”
Australian Chamber of Commerce and Industry chief executive James Pearson said the proposal would “send a shiver down the spine of small businesses right across the country”.
“[It] will dismay the hundreds of thousands of small and family businesses who depend on the current wage setting process,” he said.
“It will push up wages without regard for the capacity of business, especially small business, to pay and pass on the increased costs.”
Council of Small Business Australia chief executive Peter Strong said small business owners, many of whom struggle to pay themselves a decent wage, would not like the policy.
“It says there’s no reward for taking a risk,” he said. “It”s the antithesis of a society that rewards effort. It’s a theory and I’ve not seen anywhere in the world where it works.”
The living wage was first pushed by ACTU secretary Sally McManus in late 2017. At the time, her proposal for a living wage equal to 60 per cent of the median wage, would have seen the then-minimum wage of $695 a week jump to $852.
At the time, Mr Shorten endorsed the principle of a living wage, saying the minimum wage was failing 2.3 million people who depend upon the minimum rates in the awards.” He did not nominate a percentage increase to the minimum wage.
Greens MP Adam Bandt challenged Mr Shorten to commit to the ACTU position which the Greens endorse.
“Just like their position on Newstart, where Labor says the rate is too low but refuses to back the Greens’ call to lift it by $75 per week, Labor’s talk about inequality means nothing without action,” he said.
Asked at the Summit on Wednesday whether a living wage would be part of Labor’s policy agenda going into the election, Mr Shorten explicitly did not rule it out.
“I actually think wages growth is too low – it’s unhelpfully low. And what that means is that there’s not enough money circulating through the economy and people are either not spending, or they’re dipping into savings which is an unhealthy state of affairs,” he said.
Mr Shorten told the business audience he wanted to work with business, not engage in business bashing, but there would need to be levels of cooperation akin to those of the Accord era during the Hawke-Keating government.
“We are witness to the end of the old economic orthodoxy, the notion that supply and demand in the labour market is enough to boost wages,” he said.
“More than five years of wage stagnation under this government is proof that ‘just leaving it to the market’ leaves Australians stuck in working poverty.
“So yes, we need to breathe new life into the Australian way.
“We need a renewed spirit of co-operation, a renewed willingness on all sides to sit down and negotiate.”
He has already promised to restore weekend penalty rates, crack down on sham contracting and labour hire, and he left on the table on Wednesday the reintroduction of pattern bargaining in low-paid sectors such as cleaning and childcare.
Reserve Bank of Australia governor Philip Lowe repeated his observation that there remained a problem with real wages growth.
He said no-one knew if the last five years of low wages was structural or just the unwinding of the mining boom but it was “partly structural” and happening around the world.
“There’s something deep and structural going on. There are global factors at work that are holding down the growth of wages.”
He concurred with Mr Shorten who said the best way to grow the economy and drive productivity was via inclusive growth – a healthy and educated population.
“The number one thing we can do on productivity is human capital,” he said.
Treasurer Josh Frydenberg said wages were already rising, and the Coalition wanted them to increase further.
“The truth is wages have had their biggest jump in three years,” he said.