Employers warn Anthony Albanese that 5% pay rise will crush them

Mr Albanese’s comments, which emphasized a willingness to work with business, have alarmed industry groups about the Labor government’s future support for big pay rises.

Businesses are reporting a rapid rise in the cost of workers, with National Australia Bank’s business survey on Tuesday showing labor cost growth hit 3% in quarterly terms in April.

CommSec Senior Economist Ryan Felsman said: “With labor costs and producer prices remaining firm, rising pricing pressures should prompt further monetary policy tightening from the Bank. reserve in order to contain inflation.

Council of Small Business Organizations Australia chief executive Alexi Boyd said higher payroll costs had already been locked in for businesses with the pension guarantee increased to 10.5% and the 450 threshold removed. $ per month for workers to receive a retirement pension from July 1.

“For small businesses, wages are the biggest input, so if you raise them by 5%, it’s going to break a lot of small businesses,” she said.

“Of course business owners want to look after their people…but the conditions we find ourselves in economically are very different from two or three years ago.”

Australian Chamber of Commerce and Industry chief executive Andrew McKellar said small businesses support “reasonable” wage increases, but “imposing unaffordable wage increases on small businesses will create cruel jobs, not in will create”.

“Conditions across the economy remain patchy, with some sectors continuing to struggle and have yet to recover to pre-pandemic levels. It will take a while for many reward-dependent businesses to recover. foot,” he said.

“Clear Risk”

Australian Industry Group chief Innes Willox called increases above 5% “unsustainable”.

“There is a clear risk that a sharp increase in wages without improvements in workplace productivity will fuel inflation and increase the likelihood of higher interest rate hikes to the detriment of growth and prosperity. job creation.”

However, the ACTU cited comments by Reserve Bank Governor Philip Lowe in 2018 and Treasury Secretary Dr Steven Kennedy in early 2022 that wages are expected to increase by the rate of inflation more 1% extra for productivity.

Labor productivity has averaged about 1% over the past decade and last year increased by 2%.

“[A]Under the formula cited by the Treasury and the Reserve Bank, nominal wages should be able to rise comfortably by at least our 5.5% claim without putting upward pressure on inflation,” the submission said. NEWS at the salary panel.

Early on Tuesday, Mr Albanese distanced himself from the labor movement’s bid to the Fair Work Commission for a 5.5 per cent raise, saying it was higher than inflation.

At his subsequent press conference, Mr Albanese said a Labor government would table its own bid on what the minimum wage increase should be, but ‘people should at least follow the cost of living’.

Asked directly if he would support a 5.1% pay rise ‘just to keep up with inflation’, Mr Albanese replied: ‘Absolutely’.

During Sunday’s leaders’ debate, broadcast on Nine, which publishes The Australian Financial ReviewMr Albanese refused to guarantee wage increases would outpace inflation.

Labor has argued that Mr Albanese has not made another campaign blunder, with campaign spokesman and spokesman Jason Clare saying: ‘What’s controversial about the fact that the salaries follow the cost of living?

The government did not name a figure in its submission to the commission on wage increases, but Mr Morrison says they are expected to rise as unemployment falls.

Mr Morrison said Mr Albanese’s comments on wages highlighted a lack of experience.

Fleeing from his mouth

“If you make things up as you go, like we heard him doing today, making things up in a hurry, about what he thinks salaries should be without talking to people, without think about the consequences on the things you talk about,” he said.

“[Mr Albanese] runs on important issues like our national economy, like national security. This stuff requires careful, experienced and disciplined people who know how to manage an economy and a security environment under incredible threat.

Steven Hamilton, a visiting fellow at the Australian National University’s Tax and Transfer Policy Institute, said Mr Albanese’s position was “worrying”.

“It goes back to the 1970s and wage pricing,” he said.

Dr Hamilton said much of the inflationary pressure at present comes from externally imposed one-off factors, such as Russia’s invasion of Ukraine, driving up the costs of energy and pandemic-related supply chain disruption.

He said the Reserve Bank was very aware of the risk of a wage and price spiral and “the answer to that is higher interest rates.”

In the year to March, the headline consumer price index rose 5.1% and the underlying inflation rate, which excludes volatile price movements, was 3.7%.

But the Reserve Bank forecast the CPI to peak at 6% and the underlying rate at 4.75% this year.

A 5.1% increase would increase the minimum wage by $39.40 per week. The hourly rate is now $20.33 per hour, or $772.60 per week.

The higher-than-expected inflation rate has prompted a number of organizations to revise their suggestions for salary increases upwards.

The Australian Chamber of Commerce and Industry backed a 3% increase – the highest rate ever backed under the Fair Work Act – while the Australian Industry Group raised its demand from 2% to 2 .5%.

The ACCI said its request includes “a substantial increase in minimum wages and rewards” while “taking into account the fragilities of businesses and jobs, the unknowns and risks that prevail in 2022, and an increased diversity of ‘experiences and payment capabilities’.

But the peak body opposed a “mechanistic” approach that would raise wages at least in line with the CPI, as it was uncertain whether soaring fuel prices and supply chain disruptions procurement are ongoing or transitory.

“Any assertion that the law mandates real minimum wage increases every year would be tantamount to forcing the panel to take precisely the mechanistic or determinative approach it has consistently refused to take in previous reviews,” its submission to the panel said. on salaries.

The ACCI argued that “to control inflation, any increase in real wages must be commensurate with productivity gains”.

He argued that last year’s 2% productivity increase had been “artificially boosted” as the pandemic reallocated labor to more productive industries and less productive industries saw greater declines. significant number of hours worked during closures.

The Australian Industry Group said its 2.5% increase, coupled with the 0.5% increase in the pension guarantee and the government’s increase in tax compensation for low and middle incomes, resulted in an increase of 4.3%.

The Australian Retailers Association and retailers Woolworths and Wesfarmers said wage increases are expected to keep pace with the underlying inflation rate of 3.7%.

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