Screw the lowly paid

By April 1, 2017Australian Politics

The government was pleased with the decision to reduce penalty rates1 in the hospitality, fast food, retail and pharmacy awards handed down by the Fair Work Commission (FWC). In its decision the FWC stated that they were satisfied the existing Saturday penalty rates “achieve the modern awards objective – they provide a fair and relevant minimum safety net”. However, they decided that the existing “Sunday penalty rates in the hospitality, fast food, retail and pharmacy awards do not achieve the modern awards objective, as they do not provide a fair and relevant minimum safety net”1. The ‘safety net’ reference is meaningless drivel. What is important is the term ‘minimum’. What the Commission is saying is that these people are paid too much on Sundays, some of whom will now lose 25% of their wages for their Sunday work.

The FWC will soon be asked to decide on the increase in the minimum wage, which is currently at $17.70 per hour, which comes to $672.70 per 38 hour week2, or $34,980.40 per annum. The Unions are asking for an increase of $1.19 per hour (~6.7%), thereby raising the minimum wage to $18.89 per hour. That is an increase of about $2,300 per annum. The Australian Industry Group, the lobbying organisation is asking the FWC to take a ‘cautious approach’, by raising the minimum wage by 1.5%. That is $0.27 per hour. They want the minimum wage to go to only $17.97 per hour, an increase of about $10 per week or about $520 per year. They argue that this will be enough to sustain household purchasing power while not bankrupting businesses3. This is in fact about the same amount of increase in the Consumer Price Index (CPI) over 20164.

The Australian Industry Group uses the old arguments that a higher wage increase runs the risk of decreasing the number of people in work and reducing the amount of hours offered by employers, and that would lead to a reduction in household spending. Their spokesman came out with the hilarious quote: “We’re squeezed here between our desire to give everyone a big increase, and of course that’s got some appeal. But the reality is, that the impact that would have is very likely to worsen household spending and household income”3. Anyone who believes the Australian Industry Group would like to join with the Unions and have a large increase is probably gullible enough to believe Senator Malcolm Roberts is a climate scientist.

On top of the Australian Industry Group’s hilarity, the Australian Retailers Association (ARA) is arguing for only a 1.2% ($0.21 per hour) increase in the minimum wage3, below the most recent increase in CPI. This means that they are asking for their employees to effectively take a cut in wages. And this is on top of their full and part time employees having their Sunday penalty rates decreased from 200% to 150%.

Now for a bit of arithmetic: Sunday penalty rates in the retail industry used to pay a person on the minimum wage 200% of the $17.70/hour (i.e. $35.40/hour) With the drop to 150% for Sunday penalty rates that gives them $26.55/hour, a drop of $8.85/hour, which translates to a decrease of $61.95 for a 7 hour Sunday. If you assume for instance that a person works 40 of the available Sundays in a year, then they will lose $2,478 from their wages per annum.

If you also factor in the 1.2% wage rise requested by ARA, and make the assumption that the CPI continues at its current rate of 1.5%, that is another cut in real wages of 0.3%. For a person on the minimum wage only working weekdays, that would be a decrease of only about $105 per annum, but for a person working 40 Sundays, it would be slightly more, at about $107 per annum

So, for a person on the minimum wage, who works as many Sundays as they can to make ends meet, based on the recent FWC decision, and what has been requested by ARA in the impending minimum wage case, they can expect to lose over $2,500 per annum from their real wages. In addition, a person earning the minimum wage can expect to pay about $3,188 in tax.

Myer CEO Richard Umbers has a salary of $1.9 million, Wesfarmers CEO, Richard Goyder has a salary of $5.49 million, JB Hi-Fi CEO Richard Murray has a salary of $2.75 million, David Jones CEO John Dixon has an undisclosed salary. One wonders how much of an effect these massive salaries decrease business investment, and how much they decrease employment. You will never hear an argument along those lines from business. The hypocrisy of these organisations beggars belief. When such comparisons and assertions of hypocrisy were made in the past, the disgraceful John Howard used to call it the “politics of envy”. That was a lie. It is the “politics of greed.”




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