Australian unions warn against push for effective pay cuts amid Covid-19 recovery

Union leader Sally McManus has warned business groups against advocating for workers to take effective pay cuts after the Australian Industry Group called for no increase to the minimum wage amid the coronavirus pandemic recovery.

With the government calling a ceasefire on the last seven years of hostilities with the union movement as it attempts to reform Australia’s industrial relations regime, the issue of wages has opened up as the first challenge.

The Ai Group, in a supplementary submission to the annual wage review, argued against a wage increase for workers, claiming the economic conditions made it untenable.

“This is the first time in the past 30 years that Ai Group has completely opposed a minimum wage increase, but a wage increase in the current circumstances would make no sense,” the chief executive of the national employer association, Innes Willox, said.

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“Awarding a minimum wage increase in this year’s review would not be in anyone’s interests – certainly not in the interests of low-skilled workers who would be much more likely to lose their jobs, or in the interests of the hundreds of thousands of workers who have joined the dole queues. Over the months ahead, during the recovery from the pandemic, the priority needs to be on assisting businesses to retain as many employees as possible and encouraging businesses to take on employees.

McManus, one of the main stakeholders in Christian Porters’ industrial relations reform roundtables, said the pandemic was not an opportunity for businesses to strip workers of wages.

“Business has consistently opposed real wage increases for working people – now they are advocating a real terms pay cut,” she said.

“Undermining wage growth makes economic recovery harder and hurts our communities.”

The fair work commission is required to hand down its decision on the annual wage review by the end of June.

Last year’s annual wage review resulted in a 3% payrise for Australia’s lowest paid workers, with the minimum wage increasing to $19.49 an hour, or $740.80 a week.

The decision usually impacts around 2.2m people, but recent job losses in industries most reliant on minimum wage workers, including hospitality, have been vast, with at least 600,000 people losing their job in March and April, as the Covid-19 lockdowns took hold.

Wage growth in Australia had stagnated even before the pandemic hit, with the government’s 2019 economic forecast slashing projected wage growth from 2.75% in the April budget, to 2.5% by December that same year. A return to 3% wage growth was not forecast until 2022-23, a prediction which has been thrown out again by the pandemic’s impact on the economy.

Late last year, Labor had calculated the average fulltime Australian worker would lose more than $2,000 over the next four years because of depressed wage growth. Australia’s newest forecasts won’t be released until the budget is handed down in October.