Unions push for CPI-linked pay rises

  • Published March 20, 2023

The Australian, 20 March 2023

Union leaders have called for an inflation-level pay rise of potentially 7 per cent for 2.6 million award-reliant workers and a bigger increase for 184,000 minimum wage workers, with employers warning such an outcome would cause job losses and higher mortgage costs.

As the union movement and business groups finalise their opening submissions to the Fair Work Commission’s annual wage review, union leaders said the tribunal must address cost-of-living pressures by awarding significant pay increases to the estimated 2.8 million workers covered by minimum wage rates and awards.

The Electrical Trades Union will also spearhead a push for large “catch-up” pay rises for ­apprentices, prompting the Australian Industry Group to assert the awarding of “reckless” ­increases will result in employers offering fewer apprenticeships.

Headline inflation reached 7.8 per cent in the December quarter, the highest in more than three decades, while the monthly consumer price index rose 7.4 per cent in the year to January, down from the 8.4 per cent rise in December.

Union leaders said the Albanese government should maintain the position Labor took to last year’s wage review that the real wages of the lowest-paid workers should not go backwards.

The ACTU along with the government and employers must make initial submissions to the commission by March 31.

Inflation data for the March quarter will be released on April 26, two days before submissions are due, and ahead of the commission making a decision in June for a July 1 operational date.

ACTU secretary Sally McManus told The Australian: “When making our claim, the union movement will carefully consider all the pressures on the lowest-paid workers who are suffering through the biggest cost-of-living crisis in memory.”

Ai Group chief executive Innes Willox said union leaders calling for “unsustainable” wage increases were “curiously insensitive to the damage this would have on the welfare of Australian families”. “The Reserve Bank has explicitly warned that excessive increases in prices and wages will result in higher interest rates. For mortgage-paying households the gains from an increase in wage rates will be overwhelmed by higher mortgage costs,” he said.

“Businesses would be hit both by the higher labour costs and by the higher cost of borrowing. The result will be fewer people employed and fewer hours of work available.”

While awarding a 5.2 per cent increase to the lowest-paid workers on the minimum wage, the commission last year granted lower rises of 4.6 per cent, up to $40 per week, to workers on award rates.

Referencing Anthony Albanese comments last year backing a pay rise in line with the then inflation rate, Australian Manufacturing Workers Union national secretary Steve Murphy said he “absolutely” supported a pay rise in line with inflation for award-­reliant workers and a higher amount for those on the minimum wage.

“At a bare minimum, workers deserve wage rises that meet and beat inflation,” he said. “It’s ridiculous that workers are being punished with interest rate rises when the evidence shows us that ­inflation is being driven by corporate profiteering.”

CFMEU construction division national secretary Zach Smith said the minimum wage increase should be “above inflation”, as too many workers were doing it “incredibly tough after being smashed by the soaring cost of living and interest rate rises”. “Rent, power prices, groceries – you name it, people are under enormous pressure just to pay for the basics and minimum wage workers feel that the hardest,” he said. ”Minimum wage workers deserve a pay rise above inflation. Anything less would be a cruel blow.”

Health Services Union ­national president Gerard Hayes said an increase in line with inflation was a “decent starting point, but the truth is many parts of the workforce need a pay rise well in excess of that”.

Transport Workers Union national secretary Michael Kaine said the cost of living was “hitting workers hard across aviation and road transport, where low rates of pay are linked with poor safety outcomes”. “So far this year, 50 Australians have been killed in truck crashes, including 12 truck drivers. It’s important that this wage case ensures that workers on minimum rates experience real relief from these pressures,” he said.

ETU acting national secretary Michael Wright said the pay increase needed to keep pace with the cost of living as “workers are just taking it in the teeth whether it’s on their mortgage repayments or on the price of food or transport”.

He said apprentices were paid less than the minimum wage but their costs were largely the same as adults. He said the union was seeking catch-up increases after apprentices received lesser pay rises last year.

Mr Willox said the commission would need to be particularly careful to protect the vulnerable position of apprentices in the labour market. “A shortsighted approach of granting reckless increases to apprentice wages will undoubtedly result in employers offering fewer crucial apprenticeship opportunities,” he said. “Those calling for a large wage increase need to think through the consequences.”

Australian Chamber of Commerce and Industry chief executive Andrew McKellar said a “responsible” approach was needed.

“This would only see wages eaten up by higher prices and interest rates,” he said. “It’s important to remember who is paying minimum and award wages. These are predominantly small and family-owned businesses who are, like workers, facing trying economic times.”