EDITORIAL: Fair Work Australia’s increase to minimum wages threatens maximum pain

The nation’s 100,000 lowest paid workers will no doubt be cock a hoop at cracking the $1000 a week mark thanks to an above-inflation increase to the minimum wage.

It’s a boon for those people hustling hard for a pay packet that must feel emptier than it ought.

But beyond the celebrations, there is a portent of gloomier times and a genuine fear this blunt instrument will strike a blow to our fragile, inflated economy

In its decision to deliver an increase of 4.75 per cent to award wages and an increase to the national minimum wage of six per cent the Fair Work Commission acknowledged the inflationary risk of the “wild card” Middle East conflict.

But what of its own decision?

Industry groups have roundly rejected the increases as a burden on an already straitened economy, and on businesses small and large struggling to stay afloat much less grow as costs rise and conditions deteriorate.

The same groups called for an increase to awards closer to 3.5 per cent, while the actual increase falls well short of the 6 per cent increase unions were agitating for.

Once again failing to read the room, the anachronistic union movement appears to put its own self importance and desperation for headlines above the longer-term wellbeing of their fee-paying members in struggling sectors such as food services, retail and healthcare.

Employers are worried about business closures while AMP has already issued a fresh warning about a wage-price spiral worsening inflation.

It’s a spiral we’ve witnessed before during the heady Hawke-Keating days, and one that was arrested effectively by the Prices and Incomes Accord between the Labor Government and a Bill Kelty-led ACTU.

By bringing the unions into the tent, the government was able to keep wage demands reasonable in return for concessions that contributed to a more effective living wage – then, Medicare and superannuation.

It would be a brave Opposition to prosecute this argument, though you wouldn’t have to fluff up the pillows too much to encourage the Albanese government to hop into bed with the union movement.

And sure, the government has predictably trumpeted real wages going up but the reality is that this will put pressure on job security and inflation. We are in a dire situation with government that is addicted to taxing and spending big.

While some experts don’t agree that increases to minimum wages feed inflation, what’s undeniable is that the higher the cost base for business operations small and large, the more likelihood there is they’ll have to rationalise their workforce.

So what good is a pay increase if it’s gobbled up by a higher supermarket bill or worse, if it means you are out of a job?

Workers will of course feel aggrieved by any notion they haven’t been paid well enough but the knock on effect could hit even harder.

It is the government’s role to serve all Australians sensibly, and to work out how to deflate an economy that’s running hot above the inflation band – not set it alight.

Responsibility for the editorial comment is taken by Editor-in-Chief Christopher Dore.