Minimum wage rise is needed but no substitute for real economic reform

Wages for the majority of workers on individual contracts or enterprise bargaining agreements are rarely linked to the minimum wage.

Nevertheless, the concerns raised by Morrison and business lobby groups should not be dismissed out of hand, especially since this pay rise could be the biggest since 4.8 per cent in 2006.

While most companies can absorb this in the current strong economy, some employers might struggle to cope with the jump in their wage bills. If the Fair Work Commission sees a danger in a particular sector, it would be justified in delaying the rise in the minimum wage for those particular sectors, as it has sometimes done in the past.

Given the uncertainty, the Commission could strike a compromise between the 3 per cent which business lobby groups are demanding and the 5.5 per cent requested by the ACTU.

The deeper problem is not the next annual wage case but the fact that real wages for all workers, not just the lowest paid, have barely risen in the past decade.

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Morrison is promising more of the same. Albanese has diagnosed this problem but offered few solutions apart from a boost to childcare subsidies and workforce participation. He sometimes talks as though raising wages for the lower paid amounts to an economic reform.

While raising the minimum wage is an important social reform that protects the most vulnerable, policies on tax, industrial relations, training, energy, infrastructure investment and the promotion of workforce participation are the real key to lifting living standards.

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