AIRC Wrong
on Minimum Pay

Australian Financial Review
12th April 2005

by Des Moore

Former presidential members of the Australian Industrial Relations Commission reject claims they have disregarded employment and price effects of AIRC minimum wage decisions (Letters, April 8). They say "close account" has been taken of submissions by various bodies and decisions have been within the range of authoritative opinions.

My shortly-to-be-published examination of safety net (and other) decisions concludes that, while "account has been taken" of employment and price effects, AIRC judgements on minimum awards have in reality dismissed possible adverse effects as insignificant. Indeed, while acknowledging that its decision in the 2004 case may result in job losses in award reliant industries, the commission reached the astonishing (incorrect) conclusion that: "It ought now be regarded as well established that the expression 'low paid' in s88B(2) [of the legislation] refers to the low paid in employment and does not extend to include the low paid who are not employed."

In short, account has not been taken of the almost certain adverse effects of its decisions on those without a job.

In addition to the officially unemployed, these include the nearly 800,000 who say they would like a job but are not officially unemployed. Since 1997 the commission's minimum wage increases of 34 per cent, well above the inflation rate, have kept Australia's minimum at the second highest (relatively)in the developed world and undoubtedly kept many unskilled people out of work.

Almost as astonishingly, commission decisions have extended the safety net to about 20,000 separate wage rates specified by the award system and ranging up the income scale, resulting in 2004 in the absurd situation of arbitrated "minimum" award wages in excess of $1000 per week.

The commission's fall back justification is that 'not all employees are capable of bargaining and bargaining is not a practical possibility for those employees who lack bargaining power'. But, even if this faulty logic were accepted, it would surely apply to an even greater extent to those outside employment. On any substantive assessment, the commission's pronouncements in this area have no basis and are clearly discriminatory against the unemployed.