Thursday, July 10, 2008

Minimum Wage Increase may prove costly

"In reality, minimum wage hikes set in motion responses that ultimately hurt those at the bottom of the economic ladder..."

The Hon Julie Bishop MP - "The decision of the Australian Fair Pay Commission (AFPC) today to increase the minimum wage by $21.66 per week appears to strike a sensible balance for Australia’s lowest paid workers, taking into account the cost of living, inflation and employment conditions." more >>

It’s not often that I find myself at odds with the Shadow Minister for Employment, Business and Workplace Relations and Deputy Leader of the Opposition, but Julie Bishop may have got out of the starting blocks too early on this. The Australian Fair Play Commissions 4.1% increase is higher than expected by employers and poses a risk to not only inflation but failing that, to employment levels.

Among those critical of the rise:

The Australian Chamber of Commerce and Industry (ACCI), Australia’s largest and most representative business organisation, has described today’s decision by the Australian Fair Pay Commission (AFPC) to increase minimum wages by $21.66 per week (4.2% at the minimum wage level) from October 2008, as economically risky. This minimum wage increase is likely to flow on into price increases. more >>

Chief Executive, Australian Industry Group Heather Ridout added, “The wage rise delivered today by the Australian Fair Pay Commission (AFPC) is on the high side of expectations and will add to the pressures already on business,” Australian Industry Group Chief Executive Heather Ridout said today. more >>

Business SA says the minimum wage increase will inevitably lead to pay rise demands from employees in all sectors. The increase announced by the Fair Pay Commission lifts the minimum wage to $543 a week. Business SA's Peter Vaughan says employers may resort to cutting jobs to find the extra money now needed to pay workers. more >>

As yesterday wore on, consensus amongst experts firmed that the pay hike will ultimately hurt the jobless more so than impact inflation even though there remains a notable risk. more >>

In reality, minimum wage hikes set in motion responses that ultimately hurt those at the bottom of the economic ladder. I know that those who support the wage hikes are compassionate advocates for the underprivileged and weak while those who oppose them are deemed heartless capitalists however, the minimum wage is an inefficient means of assisting low-income workers more exactly; business growth is the source of economic opportunity and advancement for the poor. Reducing taxes, fees, and regulations would do more good than hiking and extending the minimum wage. If Governments are serious about helping the poor, they should put in place policies that assist rather than stifle business.

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