Wage freeze 'disappoints' government

8 Jul 2009, 12:27 pm   -   Source: SBS staff and agencies
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Acting PM Julia Gillard has criticised a decision to freeze the minimum wage, while the coalition says it will save hospitality, retail, childcare and cleaning jobs.

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Acting Prime Minister Julia Gillard says the country's lowest-paid workers will face a drop in real income following the wage umpire's 'disappointing' decision not to lift the minimum pay rate.

The minimum wage remains at $543.78 a week, despite unions pushing for a $21 rise.

Business groups successfully argued for no rise, warning it would cost jobs.

Gillard said the nation's 1.3 million low-paid workers would be disappointed with the decision as they battle to meet basic costs such as food and clothing.

"We understand that the Australian Fair Pay Commission is confronting the most difficult environment in which to set minimum wages for many decades," she said.

"But we do believe the decision is a disappointing one.

"It's a disappointing one for those Australians who live on minimum wages and who do it tough."

Commission 'missed the mark'

Gillard, who is replacing PM Kevin Rudd while he travels around the world this week said the government believed minimum wages should be set by an independent umpire,  but the commission had failed to strike the right balance.

In two submissions to the commission, the government asked it to award a considered pay rise to low income workers, she said.

"Obviously inflation has been moderating in these difficult economic days but zero movement in minimum wages does equal a real wage reduction for these workers," she said.

She said the decision would impact on other workers, not just those on the minimum wage.

"The safety net is the benchmark for bargaining so yes, this does effect where that benchmark for bargaining is," she said.

Unions outraged by freeze

Australian Fair Pay Commission chairman Ian Harper announced on Tuesday the minimum wage would stay at $543.78 a week - that's $14.31 an hour.

The nation's cleaners, retail, hospitality and childcare workers lost out as Australia's wage umpire awarded no pay rise for the first time since 1994.

ACTU secretary Jeff Lawrence said the decision would cost minimum wage earners $16 a week in real terms - until the next pay decision, due in July 2010.

Bearing the burden

"It is unfair to low-paid workers to be discriminated against in this way," Mr Lawrence said in a statement.

"They should not have to bear the burden of the economic downturn when people on higher incomes such as executives are the ones who can afford to tighten their belts."

The pay freeze would also curtail the economic benefits of the federal government's $900 fiscal stimulus payments, Mr Lawrence added.

The ACTU had pushed for a $21 a week pay increase for the low-paid.

But it is not pushing for a $16 a week catch-up pay rise in six months as suggested by some media reports, spokesman Mark Phillips told AAP.

Pay freeze decision 'understandable'

The wage decision is "understandable" and will protect jobs, opposition treasury spokesman Joe Hockey, adding that economic circumstances justified the decision - which affects retail, hospitality, cleaning and childcare workers.

"It is a perfectly understandable decision," he told ABC Radio on Wednesday.

"What's more important: a wage increase or people keeping jobs?"

Hockey said the ACTU’s reported ‘catch-up’ $16 plan would only be warranted if the economy was strong and inflation was low.

"Ultimately, the best thing for wage growth is a strong economy. A strong economy creates jobs, a strong economy helps to put upward pressure on real wages," he said.

The Australian Chamber of Commerce and Industry opposed any wage increase.

Coalition backs freeze

The federal coalition is backing the Fair Pay Commission's decision, blaming the global financial crisis for the move.

Opposition workplace relations spokesman Michael Keenan said the wage freeze would help preserve jobs.

"It is a job-preserving, realistic decision of the independent umpire that will support a recovery of employment levels and the economy more generally," he said in a statement.
   
"The (commission) ... always has a difficult task in balancing wage increases against the potential for job losses.

"While all workers would like to see more money in their pockets, they also can see the bigger picture and recognise that right now having a job is more important than anything else."

'Going backwards'

But unions say the decision means wages for workers will go backwards until the next minimum-wage case.
 
"Executives and other people on high incomes will not be affected by the pay commission's decision, only workers that are reliant on award minimum wages and have little bargaining power”, Jeff Lawrence said.

 

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