Wages - and Jobs !

The Fair Work Commission was faced with an impossible decision when it decided to award a twenty-two dollar a week rise to the low paid workers of Australia.  It applies equally to a café worker in expensive cities like Sydney and Melbourne as it does to the counter hand at a truck stop in a remote country town.  The big question is whether it will further deplete the already scarce job market.

Perhaps Fair Work is trying to balance the penalty rate reductions by topping up the base rate above inflation.  That increase represents  a 3.3% increase and inflation is currently running at 2.1%, but even so it now will deliver a minimum wage of a fraction over $ 36,000 a year - and that is insufficient to support a worker with family, anywhere in Australia.

Gross pay will rise by 59 cents to $ 18.29 an hour and many employers think that will kill jobs.  It will certainly cause industry to evaluate change.  Perhaps many cafes which offer table service will change to self service.  Perhaps places that shut on Sundays and were thinking of opening - may think again.

Obviously, it will work its way into the cost of living.  Everything from train fares to road tolls is geared to the cost of living and when the base rate moves, everything above that comes under pressure.  One of the problems with the low paid locked out of home purchasing is the reliance on rents.  It is quite possible that increase may be absorbed by increased rental prices.

Then there is the effect it will have on what is termed the " black " economy.  We have recently seen pay scams exposed across franchise networks as employees deliver unpaid overtime or accept " doctored " pay slips to hide pay discrepancies.   The tax office is well aware that vast numbers of people work " off the books " and receive cash in hand for their time.  Often they are also receiving unemployment benefits from the government and this extra lifts them above subsistence level.

If this pay increase results in further advances in the black economy the government may take measures to reign in cash.  India recently cancelled high denomination banknotes to force industry to use electronic banking for even small purchases.   The advantage being that electronic money changing hands leaves a trail that is invisible when banknotes are the chosen medium.

What is becoming obvious is that Australia is fast becoming a two tier economy country.  The economy is vastly different for people who live in Sydney - Melbourne - Brisbane - than for those living in regional cities and country areas.   In particular, housing has risen to a bubble in those city centres and transport costs absorb a greater proportion of each pay dollar.  We are in danger of pricing out the low paid and making it impossible for them to live and work where their labour is essential to keep the city running.

The merits of this pay increase is overwhelming.  But what changes it will bring remain to be seen  !