Labor will change the rules used by the Fair Work Commission to set the minimum wage to lift it above the “unfair” rate of $18.93 an hour, Bill Shorten has said.
At a press conference on Tuesday Shorten confirmed that Labor’s changes to lift the minimum wage will require changes to legislation, although the proposal falls short of the more extreme option backed by unions to effectively peg the minimum wage to 60% of the median wage.
Shorten said that “everything in Australia has gone up except for people’s wages”, citing columnist Greg Jericho’s observation that corporate profits are up 43% while wages have risen just 8% since mid 2016.
“It simply isn’t fair, nor sustainable for economic confidence in this country, that an adult could work full time and be earning $18.93 an hour at the minimum wage before tax,” he told reporters in Canberra.
“The minimum wage in Australia should be a living wage.”
Shorten said Labor would announce its policy “in coming weeks” but confirmed it believed in two propositions:
“We want to help the Fair Work Commission with the guidelines they use to set the minimum wage. And we want them to take into account more factors.”
“We start from the principle … that we don’t want adults in Australia working full time trying to survive on $18.93 per hour before tax.”
Shorten cited Labor’s other policies to increase wages, including reversing Sunday and public penalty rate cuts for retail and hospitality workers, closing the gender pay gap and preventing labour hire undercutting wages.
Asked why Labor planned to reverse penalty rate cuts but allow the commission to set minimum wages, Shorten replied that it trusts the commission although “periodically, they do get it wrong”.
“But what we have to do is give them the tools, give them the guidelines.”
University of Adelaide law professor Andrew Stewart told Guardian Australia that Labor is clearly “not going to take over the job of setting the minimum wage from the commission”.
He suggested that three legislative changes could be made: to change the factors the commission must take into account to “give greater prominence of needs of low-paid workers”; add an objective for the minimum wage to constitute a “living wage”; and to give the commission power to set medium or long-term targets.
Stewart said changing the factors considered by the commission would still allow it to consider macroeconomic effects and the impact on business but Labor “may feel the need to push the commission a little bit further” by inserting a reference to a living wage.
In 2016 United Voice asked the commission to adopt a long-term target of 60% of the median wage, an approach rejected by the independent umpire but taken up by the Australian Council of Trade Unions in its Change the Rules campaign.
Stewart said adoption of medium and long-term targets may be needed because it is “hard” to go from a minimum wage of 54% of the median income to 60% “in one go” and therefore Labor has conceded “it will look at phasing in any increases”.
Stewart said evidence from the UK and United States suggests the commission could award “more than very small increases to minimum wages without having an adverse impact on employment”.
In 2017 the commission increased the minimum wage by 3.2%, or about $22.20 a week, and observed that “modest and regular wage increases do not result in disemployment effects”, which employers took as a sign of larger rises to come.
Stewart said the last two increases were “well above the rate of inflation and the average level of wage increases” across the economy.