Low-pay Reasoning AwryAustralian Financial Review
Workplace Relations Minister Kevin Andrews says Britain's Low Pay Commission adopts economic rigour in its recommendations on the UK minimum wage (April 13).
This, he claims, means that the commission "would appear to have been striking the right balance between the needs of the low-paid and unemployed". However, it is difficult to see how he reached that conclusion.
There has been no reduction in the UK minimum wage relative to the median since the commission's first recommendation for a minimum of 43 percent of full time median earnings. True, a 43 percent minimum provides more incentive to employment than the Australian Industrial Relations Commission's absurd 58 percent minimum. But, by being well above the median in several other Organisation for European Cooperation and Development countries, let alone where the market rate would be, it remains a major
employment deterrent. And, as UK workers have relatively low average productivity, its deterrent effect would be all the greater.
True, the UK has a relatively low official unemployment rate - below Australia's. But official unemployment rates disguise the real position.
Just as Australia has hundreds of thousands "under-utilised" on top of the official unemployed (530,000), so too would the UK.
In short, on the evidence a UK style Low Pay Commission would do nothing to address our serious labour under-utilisation problem.