Wednesday, July 09, 2008

Australia's new minimum wage - July 2008

Some employers are crying foul over the $A21.66 increase in Australia's minimum wage, bringing the minimum weekly wage to $A543.78. I cannot agree.

Very few Australians are on the minimum wage. Those that are would be hard pressed to rent accommodation in the private market place plus pay for food.

Australia used to have the concept of the basic wage. As originally envisaged, this was meant to be the amount that a family with a single wage earner could live on. Pretty obviously, $543.78 is a long way removed from the concept of a basic wage.

Employers are worried that the increase in the minimum wage will flow on to those higher up the change. This is a legitimate worry. However, it has to be put in perspective.

The gap between the bottom and the top has been widening. If Australia cannot afford to pay its lowest income earners a wage that will allow them to at least survive in minimum comfort, then we have a real social problem.

I would argue that we need to look at a new approach that will allow all Australians to share to some degree in our growth. Without this, we are a pretty poor society.


Anonymous said...

A mandated minimum wage protects the worker from exploitation by greedy management who run or own corporations and most often run them into the ground. Airlines are a prime example. The workers, generally members of labor unions, are asked to take paycuts while the management (could be up to 1000 top and middle executives at the major airlines) are rewarding themselves and the Board of Directors with millions of dollars in payraises and bonuses being able to have extracted paycuts/profits for the company, which their bonuses are based on. I have spent my working career in the airline industry both in Australia and now in the U.S. Of course, the greed of executives is common place in the U.S. which is why salaries/wages need to be regulated both at the top as well as at the bottom of the workforce to prevent corruption at the top and poverty at the bottom. BIG example: Enron in the U.S. (by the way)George Bush was involved with them too.

Jim Belshaw said...

Thanks, for this comment, anon. Very interesting. I have to agree that the way that performance pay for senior executives works in practice does create inequities and also leads to very bad business practices.