https://www.afr.com/leadership/workplace/fair-work-raises-minimum-wage-by-3-per-cent-20190530-p51snp

Minimum wage rates are part of the fiscal policy, which can be regarded as a form of a price control policy. The objectives for minimum wage rates includes price ceiling as well as price floors to prevent the exploitation of individuals, which impacts the economy, i.e. the exploitation of the workforce.

Recently, at the end of May, the Fair Work Commission has announced a 3% increase to the minimum wage. The increase would see individuals working earning $19.49 an hour to an average $21.60 a week increase, in hopes to improve low-paid individuals living standards after the FWC considered the economy was performing moderately well. However, the increase was below last years wage increase of 3.5%, reflecting the FWC’s ‘overly cautious’ approach to wage-setting. Adding on, it highlights the caution the FWC has considering changed in the economic environment, the decrease in GDP and inflation rate.

The decision came after the FWC rejected the Australian Council of Trade Unions’ (ACTU) bid for ‘living wage’ for single earner family because it was a huge increase that would rise jobs, but deter employment. This links back to the theory, where though a wage increase may be beneficial towards low paid employer’s it would not have the potential to assist individuals looking for employment. This is because an increase in wages would mean firms paying more for workers, hence they are un-attracted to hiring new people and hence, it would run a significant risk of disemployment and adversely affecting the employment opportunities of low-skilled and younger workers. Further, the FWC stresses that minimum way is only a “blunt instrument for addressing the needs of the low paid,” compared to targeting the progressive tax system would be a “stepping stone towards higher paid work.” Further Australian Chamber of Commerce and Industry said the increase was “well in excess of inflation” and would put jobs in danger and risk the viability of some small businesses. They forecast that a further 1.1 million individuals will be underemployed.

Overall, it was 7% short of the ACTU living wage target, but ACTU assistant secretary Liam O’Brien comments that the increase is welcomed.