Keep award wages ahead of inflation, govt urges umpire

West Australian

16-05-2025

Low-income workers should be rewarded with a real increase in their wages, but only if it doesn't cause inflation to get out of hand, the federal government says.
In its formal submission to the Fair Work Commission's annual review of minimum and award wages, the federal Labor government said award workers should receive an "economically sustainable real wage increase".
The government did not nominate a specific figure, in keeping with past practice.
Real wages growth means workers' pay packets increase faster than prices rise in the economy, ensuring they are better off overall.
But without accompanying growth in productivity, wage increases exceeding inflation could drive prices higher.
The government's expanded emphasis on "sustainable" real wages growth in this year's submission, compared to the previous year, dovetails with Treasurer Jim Chalmers' comments that there will be a greater focus on boosting productivity during this term of government.
"An increase in minimum and award wages should be consistent with inflation sustainably remaining within the Reserve Bank of Australia's target band (of two to three per cent)," said the submission published on Friday.
The Reserve Bank of Australia has expressed concern Australia's tight labour market could push up inflation, with higher pay rises flowing through to cost pressures for businesses.
In the long term, it is hard for an economy to support real wage growth without productivity growth, said the central bank's head of economic analysis Michael Plumb in a speech at an Australian Business Economists conference in February.
Data released by the Australian Bureau of Statistics on Thursday showed the unemployment rate remained at a historically low 4.1 per cent in April. That has helped annual real wages grow for the past 18 months.
But Australia's productivity growth has cratered in recent years.
Dr Chalmers has said that while the government's first term was primarily about fighting inflation without forgetting productivity, the second term will primarily be about fixing productivity without forgetting inflation.
"The government recognises the importance of lifting productivity to drive real wages growth over the long term and is implementing a significant productivity agenda," the submission stated.
The Fair Work Commission has delivered $143 a week in minimum wage increases since the Albanese government came to power in 2022.
Increasing awards and the minimum wage above growth in market wages will also likely help narrow the gender pay gap, the government said, given women are disproportionately represented in lower-paid, award-reliant jobs.
A landmark ruling by the commission in April meant workers in predominantly feminised industries such as health and child care would receive substantial pay rises of up to 35 per cent.
Asked about this on Thursday, Employment Minister Amanda Rishworth declined to say whether the government would help employers fund the pay rises.
"The government supports the commission's review process and the broader task of identifying and addressing gender undervaluation in the modern awards system and is continuing to participate in the review," the submission said.