Minimum Wage Debate in Australia

This article discusses the issue of minimum wage in Australia, including the perspectives of stakeholders and the analysis of the issue. It also explores the Triple Bottom Line approach and provides recommendations for improvement. The article highlights the need for a fair minimum wage that supports workers and improves their standard of living.

MINIMUM WAGE DEBATE IN AUSTRALIA

Table of Contents
1.0 Issue...........................................................................................................................................3
1.1 Identification of Key Stakeholders........................................................................................3
1.2 Explanation of Perspective of Stakeholders...........................................................................3
2.0 Analysis of Issue........................................................................................................................5
2.1 Analysis of the Issue faced by the Stakeholders....................................................................5
2.2 Analysis of Triple Bottom Line (TBL) Approach.................................................................5
3.0 Criticism of the issue: Submission for Consideration of Minimum Wage Review..................7
3.1 Recommendation...................................................................................................................7
3.2 Justification............................................................................................................................7
3.3 Criticism for Position.............................................................................................................7
References........................................................................................................................................8
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1.0 Issue
1.1 Identification of Key Stakeholders
The concept of offering a standardized minimum wage to the workers was centred at improving
their standard of life. However, with the passage of time, the intention behind this concept is no
longer the same. In the present time, the decision regarding minimum wage margin is made by
the panel of expert dominated by the economists. The outcome shows that the margin of
minimum wage system in Australia has fallen drastically, which no longer supports the working
family members to come over the poverty lines. Moreover, the data of 2018 reveals that a review
conducted by ACTU (The Australian Council of Trade Unions) on the Australian minimum
wage system highlights that the workers require at least a hike of $45 per week (ACTU
Australian Unions, 2018). On the other hand, the employers and the business group segment
have argued to the latter statement and stated of raising the margin only by $ 10.10 per week.
1.2 Explanation of Perspective of Stakeholders
It has been observed that since the year 1998, the minimum wage rate in Australia had fallen
beneath the broadly accepted poverty line of 60% of average earning (ACTU Australian Unions,
2018). On the other hand, data received from ‘Trading Economics' shows that the region and its
workers have enjoyed 26 years of uninterrupted growth in the economy, which merely can leave
any of its workers in the poverty line (Tradingeconomics.com, 2018). The Fair Work
Commission had enhanced the Australian minimum wage rate by 3.5% to AU $719.2 per week.
The 3.5% rise is well beyond the 1.9% of the inflation rate, signifying that the workers in the
Australian market had genuinely experienced a growth of 1.6% in their minimum wage earning
figure. In 2018, the figure had reached a hike of AU $ 719.20 per week, which specifically
represent the efforts and benefits the employers are showing towards their workers in terms of
improving their spending capacity and lifestyle as a whole. However, despite a gradual rise in the
rate, the workers have not managed to come over the poverty line (Fwc.gov.au, 2019).
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Figure 1: Rise in the Australian Minimum Wage Rate
(Source: Tradingeconomics.com, 2018)
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2.0 Analysis of the Issue
2.1 Analysis of the Issue faced by the Stakeholders
The expert panels responsible for deciding the wage rate have claimed the fact that the rise in the
minimum wage rate in Australia would never cost jobs but would support the workers to
experience a hike of $ 22.20 per week (ACTU Australian Unions, 2018). It has been recognized
that the minimum wage rate has become one of the most contentious problems in Australian
economics. Howlett, Gray and Hunter (2018) stated that any adequately higher minimum wage
beyond the market price would definitely lock the labours out of the workforce. The sudden rise
in the minimum wage rate would definitely forcer the employers to shrink their workforce and
recruit the candidates whose skills and productivity can justify the recent cost system. Therefore,
it can be stated that the employers have gradually offered a decent rise in the minimum wage rate
to its workers, without creating any impact on employment figure. Despite the provision, the
workers failed to improve their standard of living and pressurizing the government to raise the
margin more. This would create a relative pressure over all the employers, which could create a
drastic impact on the Australian employment scenario (Cai and Liu, 2015).
2.2 Analysis of Triple Bottom Line (TBL) Approach
Karp (2019) stated that the primary objective of an employer is to ensure that its people are in a
secure condition. Therefore, the employers need to offer a fair minimum wage rate that
effectively justifies the workers' hard work, time and energies. Employee motivation shall be the
key focus of every employer. According to Karp (2019), the basic pay of every organization
needs to be fair and lucrative to keep every employee motivated. Similarly, the employers in the
Australian market shall provide a standardized figure of the minimum wage to its resources to
help them improve the lifestyles. Additionally, the employers also owe a responsibility towards
the plant and the community. The rise in the minimum wage rate would automatically reflect on
the community upliftment, which would showcase the improvement in their lifestyle and
affordability (Fair Work Ombudsman, 2019).
In this context, the concept of TBL may be shown by way of a diagram as shown herein.
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Figure 2: Triple Bottom Line (TBL) Framework
(Source: University of Wisconsin Sustainable Management Degree, 2019)
As stated earlier, the framework focuses on 3Ps of a business namely People, Planet and Profit,
out of which people may be considered to be one of the most critical aspects for a business. In
this present context, it may be stated that the workers may need to be satisfied in terms of their
financial benefits and compensation packages which may be offered by the employers. It is
needless to mention that the average wage position of the country has been far below normal and
that may be considered to be a major reason for the de-motivation of the employees leading to
the unproductively and inefficiency in the operations.
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3.0 Criticism of the issue: Submission for Consideration of Minimum Wage Review
3.1 Recommendation
It has already been witnessed in the previous discussion that the Australian economy had already
undergone a gradual rise in the minimum wage rate to improve the living standards of the
workers. However, unfortunately, the growth rate had not been adequate to help the workers
coming over their poverty line. Therefore, the employers in consultation with the panel experts
need to draw a conclusion where other measures like the rising in the subsidy or alterations in the
tax system can be incorporate other than just focusing on the minimum wage system.
3.2 Justification
As per Healy (2016), the cost of living in Australia is increasing with the passage of time.
Therefore, in spite of getting a hike in the basic pay scale, the workers are inefficient to save
their earnings. Hence, the government needs an emphasis on bringing alteration in the tax system
or subsidy rate that can help the workers to enjoy the rise they are getting in their minimum wage
scale.
3.3 Criticism for the Position
Nevertheless, any abrupt decision made by the employers might indulge lower profitability. If a
large portion of capital is invested on employee wage scale without planning any contingency,
the business might struggle to survive the threat of uncertainties.
Based on the discussion and analysis performed in the preceding sections of the paper, it may be
conceived that the minimum wage level in the country has been a prime concern for the
employers as well as the regulators as the same is observed to be much below the standard level.
Though there has been a consistent rise in the wage level for past several years, still the persons
belonging to below poverty line (BPL) has not been provided with sufficient means to earn own
bread and butter. Therefore, the regulators may need to consider the issue accordingly and seek
for revision in the wage level in line with the level of inflation (McKenzie, 2018). Finally, it may
be considered that a well-designed minimum wage policy formulated by the regulators supported
by the Government by way of controlling and monitoring will significantly contribute towards
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the Governmental aims of sustainability through holistic development of the society in the long-
run in most time and cost efficient manner.
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References
ACTU Australian Unions. (2018). Our minimum wage has workers living in poverty. [online]
Available at: https://www.australianunions.org.au/minimum_wage_ctr_factsheet [Accessed 9
Apr. 2019].
Cai, L. and Liu, A.Y., (2015). Wage differentials between immigrants and the native-born in
Australia. International Journal of Manpower, 36(3), pp.374-396.
Fair Work Ombudsman. (2019). The Fair Work Commission and us - what's the difference?.
[online] Available at: https://www.fairwork.gov.au/about-us/our-role/the-fair-work-commission-
and-us-whats-the-difference [Accessed 9 Apr. 2019].
Fwc.gov.au. (2019). Statistical report—Annual Wage Review 2018–19. [online] Available at:
https://www.fwc.gov.au/documents/wage-reviews/2018-19/statistical-reporting/
statisticalreport.pdf [Accessed 9 Apr. 2019].
Healy, J., (2016). The Australian labour market in 2015. Journal of Industrial Relations, 58(3),
pp.308-323.
Howlett, M., Gray, M. and Hunter, B., (2018). Unpacking the income of Indigenous and non-
Indigenous Australians: wages, government payments and other income. The Australian
National University.
Karp, P. (2019). A significant increase in the minimum wage won't cost jobs, Labor says.
[online] the Guardian. Available at:
https://www.theguardian.com/australia-news/2019/mar/15/significant-increase-in-minimum-
wage-wont-cost-jobs-labor-says [Accessed 9 Apr. 2019].
McKenzie, M., (2018). The erosion of minimum wage policy in Australia and labour's shrinking
share of total income. Journal of Australian Political Economy, The, (81), p.52.
Tradingeconomics.com. (2018). Australia Minimum Weekly Wage | 2019 | Data | Chart |
Calendar | Forecast. [online] Available at: https://tradingeconomics.com/australia/minimum-
wages [Accessed 9 Apr. 2019].
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University of Wisconsin Sustainable Management Degree. (2019). A Simple Explanation of the
Triple Bottom Line | University of Wisconsin. [online] Available at:
https://sustain.wisconsin.edu/sustainability/triple-bottom-line/ [Accessed 9 Apr. 2019].
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