The Fair Work Commission has decreed that from July 1 Australia's 70,000 low paid workers will get an extra $16 a week in their pay packets. The new minimum wage will be $ 17.29 an hour, which delivers $ 656.90 per week. That is more than employers wanted to give and less than the unions demanded - and it will work it's way into the cost of everything from the price of a cup of coffee to what we will pay for a haircut.
Those at the bottom of the pay scale in Australia do much better than their counterparts in the rest of the world. Across the Tasman the Kiwi minimum is just $ 14.75 an hour. It is $ 12.85 in the UK and Americans come last with their rate ranging from $9 to $ 11 an hour depending on the ruling in each different state.
An increase in the minimum wage has a psychological effect on the entire wage structure. When the bottom level edges upwards those above see their wage eroding and start clamouring for a raise to preserve their skill margin. It is like a train shunting waggons on a siding. As one waggon moves the momentum passes to another - until the whole chain of waggons is in motion.
Unfortunately, there are indications that the ranks of the lowly paid seem likely to further increase if a trend emerging in our apprenticeship system continues. About half the number of young people starting out to learn a trade fail to continue their training and simply walk away, resulting in a twenty percent drop in the number of new apprenticeship places being offered. A failed apprenticeship comes at a heavy cost to an employer and many no longer bother to train the next generation because of this increasing trend.
It seems that many of our young men and women are work shy. Most trades traditionally make an early start and that does not suit the lifestyle of some people. Many leave the school system with a chip on their shoulder and resent having to learn a trade procedure being taught by a professional. Their attitude to their employer may range from being insolent - to simply disinterested. They have no established work ethic - and think nothing of emailing in a " sickie " if the surf's up and the sun in shining. That word " reliability " is a missing component.
Sadly, those walking away from a trade qualification are turning their backs on earning capacity that is now outstripping the rewards normally associated with a career in the professions. The scaling back of apprenticeships will further thin the ranks - and lead to ever increasing prices. Learning a trade has always been the gateway to moving from collecting a pay packet on payday to owning your own business - and for many that is the ultimate in personal freedom.
A similar decay is becoming evident in the University sphere. The dropout rate is appalling and it is apparent that many school leavers have not thought through their career options with care. The fact that attaining an entry level pass in the HSC opens the University door does not automatically ensure success. If dedication is missing it is unlikely that many will finish the course and this pushes up university costs and adds to the HECS bill for those that remain. Every mid term empty seat counts against the overall cost of running a University.
The problem with an increase in the minimum wage is that is becomes a powerful incentive not to hire additional people. It certainly adds pressure to businesses that trade on Saturdays, Sundays and public holidays - where time and a half and double time penalties apply, and now are calculated on an increased base.
This added burden will do nothing to ease the problem of high youth unemployment. We are seeing increasing numbers of young people who are leaving school and rejecting further study for a professional career or becoming apprenticed and learning a trade. They have absolutely no skills to offer a potential employer - and in many cases they seem to think they are doing him or her a favour if they get a job ! It is clearly an attitudinal problem !
If we are not very careful we will end up a country with a vast pool of permanently unskilled labour who are unable to find a job, and a workforce of migrants who we have welcomed into this country to supply the skills we so desperately need to make the nation function.
Perhaps Lee Kwan Yew's jibe about us becoming " the poor white trash of Asia " was a warning we should heed !
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