Peak bodies respond

Monday, 01 August 2022

Susan Muldowney photo
Susan Muldowney

    It’s not just the Reserve Bank of Australia that has reservations about the wisdom of excessive wage rises in the current inflationary climate.

    ACTU secretary Sally McManus made headlines in June when she criticised RBA Governor Philip Lowe’s comments that excessive wage increases above 3.5 per cent might kick off a 1970s-style wage- price spiral. “We’re not achieving 3.5 per cent, let alone five per cent, let alone seven per cent,” she said. Her statement came a week after the Fair Work Commission lifted the minimum wage by 5.2 per cent, to $21.38 an hour.

    But the RBA is not alone in its concerns of wage rises in the current economic climate. In response to the Fair Work Commission’s Annual Wage Review, Innes Willox, chief executive of the national employer association Ai Group, described the increase as adding “fuel to the inflation fire”.

    “The cost increase will be difficult to absorb for businesses already struggling to cope with big increases in material and energy costs, interest rate rises, supply chain disruptions and labour shortages,” he stated.

    Meanwhile, MacManus insists that pay rises must be lifted. In an ACTU statement, she noted, “There are still 8.5 million workers who don’t know where their next wage rise is coming from. Our current system means that despite low unemployment, high productivity and record profits, labour’s share of GDP is at a record low and Australian workers have faced a decade of record low wage growth capped by ongoing real wage cuts.”

    In its submission to the Annual Wage Review, the Australian Retailers Association (ARA) supported a lift in the minimum wage in line with the RBA’s rate of underlying inflation, but is concerned by the scale of the announced increase. ARA CEO Paul Zahra GAICD says his organisation is keen to engage with the government on industrial relations reform, but notes that many of the cost pressures impacting the industry this year are “unprecedented”.

    “There’s no doubt it’s an incredibly challenging economic environment for Australia’s retailers,” he says. “They’ve navigated the worst of the pandemic, but the hits just keep on coming from ongoing supply chain issues and staff shortages to the rising cost of fuel and materials. Despite all this, we remain optimistic in the short term that consumers and businesses will be able to withstand the current challenges. Retail sales have been at record levels, so even though interest rates are on the way up, we haven’t seen that have an immediate impact on spending.”

    The ARA’s wish list for the new federal government includes a relaxation of income restrictions on pensioners willing to work to fill critical labour gaps. It’s also keen for Canberra to cut immigration red tape to make it easier for overseas workers to gain employment in the sector.

    Zahra says the ARA was in favour of the previous government’s “omnibus” industrial relations bill, dumped last year due to opposition from Labor and the crossbench. The proposed bill included a number of changes to the Fair Work Act — part-timers covered by hospitality and retail awards would have been able to agree to work extra hours without overtime, for instance, and employers who were involved in deliberate and systemic underpayments could have faced jail time.

    “When it comes to industrial relations reform, the failure of the omnibus bill last year was a lost opportunity,” says Zahra. “We would welcome the opportunity to engage with the new government [on] improvements to award flexibility, as well as upskilling and increasing women’s participation in the workforce.”

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