In a staggering submission to the Fair Work Commission, the government has urged against a minimum wage rise because it will benefit married women, young workers and people in “temporary” low-paid work.
The Turnbull government has recommended the Commission to “take a cautious approach” in this year minimum wage review. It argues:
“low-paid workers are more likely to be young, female, single or without children. They also have varied living standards and levels of household income with nearly half of low-paid workers in the top 50 per cent of household income. Given this, minimum wage increases are not well-targeted at lifting the relative incomes of low-paid households, as wage increases will also be directed to well-off households.”
The government also claims “low-paid work is temporary for a majority of low-paid workers”.
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Problematically for the government’s claims, the work of the Productivity Commission in its 2015 industrial relations review, which has been hastily cribbed for the submission, undermines these claims. Yes, the lowest income quintile — the poorest Australians — contains fewer minimum wage workers than higher income quintiles. But that’s a statement of the obvious — the poorest Australians are the jobless and pensioners. So minimum wage increases flow to higher income quintiles and benefit the lowest income quintile proportionately less, because fewer work in that quintile.
But, the PC noted, “while most people in the lowest quintile are not in work (and therefore do not receive any wages), almost half of those who are in work are paid at a minimum rate.” The Government’s suggestion that minimum wages mainly benefit higher-income households is only true if you don’t consider the impact on working households — in which case, as the PC explains, “the distribution of the gains from the minimum wage favour households in the lowest quintile of working households, both in gross and net terms.” Take out households on the age pension and disability pensions where people are unable to work, and minimum wage increases have significant benefits for low income earners.
The government’s claims that workers on the minimum wage are only on it temporarily (again, a statement of the obvious given most of us enter the workforce in low-paid jobs) also overlooks the PC’s finding that 5% of the workforce up to 34 years old are still on minimum wage, and around 4% are still on it up to 44 years old.
And the industry with by far the greatest number of minimum wage employees is “accommodation and food services”, where the FWC has just paved the way for wage cuts by cutting back on Sunday and public holiday penalty rates. The government really seems to have it in for people working in the hospitality industry.
But what is most problematic in the submission is the 1950s-style sexism latent in the argument that a minimum wage increase for women isn’t necessary because many are in middle or higher income households — that is, women should not get pay rises because their husbands are doing okay. So much for the economic empowerment of women, or treating them as individuals rather than appendages to their partners. Women were actually awarded a lower minimum wage than men until the mid-1970s because male wages were supposed to “take account of family considerations”, but that was ended under the Whitlam government. More to the point, the FWC itself has rejected the idea of factoring in what a household earns. It said this in its 2014 minimum wage decision:
The appropriate reference household for the purposes of setting minimum wages is the single person household, rather than the couple household with children.
So the government’s position not merely distorts the evidence, but is irrelevant to the Commission. It wants to return to the good old days when minimum wage decisions were made based on the needs of male breadwinners.