Magazine of Socialist Action in Australia

Minimum wage failing to keep up with living costs

Reading Time: 3 minutes

From July 1 the legal minimum wage for workers in Australia was increased to $16.87 per hour. This represents an increase of 3% or just $18.70 per week. The change was handed down by the Fair Work Commission in their yearly wage review decision.

While any relief from cost of living pressures will be welcomed by low waged workers, in reality this paltry increase represents a backwards step considering the impacts foreshadowed in the federal budget, and the current rate of inflation of 2.9%.

In November last year Abbott government advisor Maurice Newman complained that Australia’s minimum wage was already too high. Newman – an investment banker – is head of the Business Advisory Council, a body designed to propose policies that best serve the big business agenda.

In the Australian Council of Trade Unions (ACTU) submission to the minimum wage review, the unions delivered only a piecemeal claim to raise the minimum wage by a mere $27 a week. This claim was similar in scope to the tiny wage increases they routinely seek year after year.

Worse still, rather than proposing industrial action to fight for a genuine living wage, the ACTU limits their campaign to a few media releases and posts on their website. For the most part, their approach takes the form of a moralistic plea to government and big business to provide a dignified wage, without providing a platform for workers themselves to have their voices heard.

This approach has been an abject failure, proven by the fact that for decades the gap between rich and poor has been increasing. Without an adequate fight back from workers this situation will only get worse.

Recently Newman criticised the budget backlash, suggesting that Abbott’s cuts don’t go far enough. The commission of audit preceding the budget included recommendations to ‘contain’ the minimum wage by decreasing it every year for ten years.

Abbott is at this stage claiming that any major industrial relations changes will wait until after the next election. Yet as Newman’s comments demonstrate, big business is prepared to seek a lower wage for the poorest workers as one strategy to shore up profits. With this in mind, a failure to stop Abbott’s budget measures now could embolden employers to go on the offensive and push for a lower minimum wage in the future.

The reality is that organising and mobilising low wage workers is possible, and significant wage increases can be won. This was shown with the successful $15 Now campaign in the US which almost doubled Seattle’s minimum wage thanks to a fighting strategy implemented by socialists and trade unionists in that city.

In recent weeks, thousands of people have taken to the streets in protest against Abbott’s budget. People are prepared to fight but they are looking for a lead. The truth is any attempt to make people pay more for services is an effective pay cut taking money out of the pockets of workers and putting it into the coffers of big business.

By linking the fight against the budget to the demand for a genuine living wage, real gains could be made. Attacks on things like public health, education and transport should be seen as core union business.

The Socialist Party campaigns for a $20 minimum wage linked to a 35 hour week. Side by side providing people with free healthcare, education and transport we could start to see low waged workers achieving a decent standard of living and the gap between rich and poor could be reduced.

Ultimately, it is the profit system that drives governments and employers to keep wages low and the costs of basic services high. Only a democratic socialist society which removes the profit motive could break us from this cycle and see society’s wealth used for the benefit of all.

By Ben Convey


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