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Australia denies wage rise to low-paid workers

world Updated: Jul 07, 2009 10:31 IST
Australia denies wage rise to low-paid workers

More than one million of Australia's lowest-paid workers were refused a wage rise on Tuesday after the country's industrial umpire accepted employer warnings that a hike could slow or stall economic recovery.

The ruling meant that the pay rate for 1.3 million low-paid workers such as cleaners, childcare and hotel workers remained stable at A$543.78 ($428.84) for working 38 hours a week. Unions had pushed for a rise of at least A$21 a week.

"This is not the time to risk the jobs of low paid Australians by increasing minimum wages," Fair Pay Commission Chairman Ian Harper said in a statement.

"While some commentators are pointing to the "green shoots" of a recovery, even these observers agree that unemployment will rise further before it begins to fall," Harper said.

Employers had pressed for no increase as Australia battles to stay out of recession and with joblessness tipped by the government to rise above 8 per cent next year, from a five-year high of 5.7 per cent in May.

One in three businesses planned to shed staff in the current quarter, while 48 per cent of firms expected profits to slide during the three months, a Dun and Bradstreet National Business Expectations survey of 1,200 companies showed on Monday.

The centre-left government in its submission lent its weight to business fears and pushed only for no wage reduction, warning it could counteract over A$52 billion in government economic stimulus spending since September.

Roughly one in 10 Australian workers are low-wage.

The Australian Chamber of Commerce and Industry, representing employers, said in its submission to the commission that workers have already benefited from tax and interest rate cuts, as well as A$12 billion worth of cash stimulus handouts.

"Many Australian businesses are still operating in very challenging economic times," the chamber's spokesman David Gregory told state radio on Tuesday.

Harper said the decision took account of the economic and social circumstances, with an increase in minimum wages this year having potential to seriously dent employment.

"The commission's concern at this time is that a blanket increase in minimum wages, while affordable to some businesses, may not be sustainable for all businesses and will therefore result in lower employment and even in some business closures," he said.

The decision was the last for the Fair Pay Commission, with its role to be transferred in future to Fair Work Australia, which is the government's new workplace umpire.

Harper said the new body would have an opportunity in another six months to review minimum wages.