Australian Council of Trade Unions tells Fair Work Commission it wants a 5% pay raise to minimum wage

The annual stoush over how much the minimum wage should increase has kicked off with unions pushing for a 5 per cent rise.

But one employer group has said the nation’s lowest-paid workers have been “overcompensated” in the past two years and should get a below-inflation increase.

On Monday, the Federal Government revealed it would tell the Fair Work Commission for the third year in a row that low-paid workers deserve more.

And Treasurer Jim Chalmers argued the revamped stage three tax cuts should not factor into the commission’s decision.

“We don’t see cost-of-living relief as an alternative to decent wage growth. We want to see decent wage growth on top of the billions of dollars in cost-of-living relief that the Albanese Government is rolling out,” he said.

Business groups have argued otherwise for a couple of months.

On Monday, Australian Chamber of Commerce and Industry chief executive Andrew McKellar said the tax cuts were clearly a “relevant point” in the considerations.

His group will submit a submission to the wage review arguing that the increase should be limited to 2 per cent.

Monthly inflation was at 3.4 per cent in January, less than half where it was a year earlier. Newer data will be released on Wednesday.

The Australian Council of Trade Unions will argue for a 5 per cent increase to minimum and award wages, which Secretary Sally McManus described as “fair and reasonable”.

“When inflation goes up, businesses are able to adjust their prices to protect their margins, but workers’ pay does not move so easily,” she said.

“For some perspective, the CBA posted a $10 billion profit last financial year. It could pay for the entire union wage claim for 2.9 million workers of 5 per cent and still be one of the most profitable businesses in the country.”

But Mr McKellar said wages were one of the persistent cost pressures for businesses and increases above inflation couldn’t be supported without gains in productivity.

He argued workers would not only benefit when the new tax cuts start in July, but they would also benefit from falling inflation and “overcompensation in the past two years” with above-inflation increases.

“If you take account of the generosity we’ve seen in the commission’s past decisions, the fact that they’ve erred in their assessment of what’s been underpinning that and its impact on wages growth, then we would say that this year the decision needs to be significantly tighter,” he said.

“We can’t continue to pay hand-over-fist, you know, in terms of wage outcomes in this country.”

The minimum wage is currently set at $23.23 an hour or just over $45,900 a year for full-time workers.

Last year, the Fair Work Commission awarded an 8.6 per cent increase to the minimum wage and 5.75 per cent for awards based on it.