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Minimum wage needs to be fair

Comments on Michael Stutchbury “Harper’s ruling will save thousands”, 8/07/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/harpers_ruling_will_save_thousands/

The determination of the legal minimum wage for the lowest paid should always be a fine balance act, and especially so at the time of a recession or economic down turn.

However, that does not mean that a wage freeze for those lowest paid is right even for the current circumstances. The following argument by the author is disturbing:

“Since it began in 2006, the FPC has maintained the minimum wage floor in real or after-inflation terms. And this has been topped up by higher family payments, low-income tax offsets and now the budget stimulus handouts.”

If that is true, it means there has no increase in wage for any productivity gains during that period. That is hardly a fair outcome for those lowest paid workers.

One argument may be that there has no productivity gain since 2006 by those lowest paid workers. While that may be true, it needs to be proven.

To trade off a justifiable right wage structure with low-income tax offsets was not a good policy. It does not encourage people to work and get compensated through wage earnings. It encourages a welfare dependent culture. It also distorts tax structure and tax on other people more heavily than it should.

Of course, the current government’s act is also condemnable. It does not have the courage to say how much the lowest wage should be increased. It is not good enough for a government and its ministers to say a considered increase without specifying the degree or quantum, and then complaining the outcome of the Fair Pay Commission’s decision afterwards.

The government should make its stance clear. It is up to the Commission to decide what the best outcome should be and is after considering every side and taking account the circumstances. Everyone has a job to do. The government cannot be opportunistic.

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