Case Study: Australian Minimum Wage Regulation and Stakeholder Views

This case study examines the multifaceted issue of minimum wage in Australia, focusing on the perspectives of various stakeholders involved in the annual review process conducted by the Fair Work Commission. The analysis delves into the contrasting viewpoints of organizations such as the Australian Council of Trade Unions (ACTU), the Australian Industry Group (Ai Group), and the Australian Chamber of Commerce & Industry (ACCI). The ACTU advocates for increased minimum wages, citing declining living standards and the need for social inclusion, while the Ai Group and ACCI express concerns about potential job losses and the impact on small businesses. The study explores the economic arguments, including the effects on employment, inflation, and business competitiveness. It also discusses the importance of tripartite agreements involving government, employees, and employers in determining minimum wages. The case study concludes with recommendations for involving stakeholders and aligning minimum wage decisions with economic needs.

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Executive Summary
The issue of minimum wage is a hotly-contested issue in Australia as well as the entire
world. Many times, activist groups such as the Australian Council of Trade Union have been
at the forefront of advocating for increased minimum wages for all employees. This is
mainly a result of poor economic times and the rise in the cost of living. The amounts that
employees receive are not sufficient enough to sustain families and other dependants.
Taxation is also an issue where there are different taxes that have to be deducted from
these wages. The Fair Work Commission has been at the forefront also looking into ways in
which the minimum wage can be raised thus enabling Australian Citizens to have a decent
pay. There are also factors that have to be determined when seeking to increase the
minimum wage. This includes consideration of the current economic time that has led to
increasing in living standards, demand for quality work that can only be achieved by having
a skilled workforce and also the need to provide the basic needs to the society. Reviews are
made yearly so that a minimum wage can be set.

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Introduction
The review process done annually by the Fair Work Commission involves different
stakeholders who make their submissions concerning this agenda. These stakeholders
include the Australian Council for Trade Union, the Australian Industry Group, the Australian
Chamber of Commerce and Industry as well as the Australian Catholic Council for
Employment Relations. In their submissions, these bodies propose their preferred amounts
of minimum wages as well as discussions about the proposed minimum wages set by the
Fair Work Commission. For this to happen, these groups have their own reasons and criteria
that help in the determination of what the minimum wage should be, (Brennan, 2017, 37).
The process followed before the Fair Work Commission entails different individuals and
organizations making their submissions before the panel, consultations are made before the
panel of experts and a research is started and commissioned by the Panel of Experts.

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Analysis and Discussion
The contrasting interests to minimum wage determination reflected in the submission of
the (ACTU) Australian Council of Trade Union on one side and (Ai Group) Australian
Industry Group and Australian Chamber of Commerce & Industry (ACCI) on the other side.
The submission presented by the Australian Council of Trade Union raised a lot of
issues pertaining to the need to increase the minimum wage. The most dominant reason
was the declining living standards being experienced by a majority of Australians. This is
despite many of them being employed and fully depending on the minimum wage. The
submission raised this as a relevant factor that has to be considered when determining the
minimum wage. Increasing this wage also helps the employees to afford their needs which
have gradually increased. For instance, the cost of food, shelter, housing, and personal
needs have been on the rise despite the meager wages received, (Chrisman, 2018, 13). Most
importantly, women have low wages compared to their male counterparts despite working
under the same rank and work conditions. The other aspect of increasing wages ensures
that social inclusion is achieved especially when ones’ work is able to pay well.
A different reason raised in the submission entails how an increase in minimum
wages activates active spending which also translates into the growth of the country’s
economy. Low wages at times restrict employees to spend the little they have as much as
possible hence making the economy growing slowly. As such, an increase of income will
make employees see the benefit of working hence ensuring that they get the access to the
best facilities, services, and social activities, (Farbenblum, 2017, 312). As a result, businesses
will be made profitable due to their spending. To back these points up, the submission

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states that there has been a growth of 2.4% in the economy since 2016 and this was
brought up by the high rates of employment in the country. In addition, there was low
inflation recorded compared to the past twenty years. The rates of bankruptcy were also
low compared to 13 years ago. Despite this, growth in wages was reported to be slow,
(Borland, 201, 17).
Increasing the minimum wage according to ACTU will help in fighting the erosion of
living standards being experienced especially by those being paid low wages, (McKenzie,
2018, 52). This is also accompanied by the desire to reduce inequality and thereby
encouraging the growth of the country’s economy. In many cases, inequality leads to a
slower economic growth because only a few people contribute into the economy. Increasing
the minimum wage will ensure that the economy grows because of increased expenditure.
Increasing the minimum wage will lead to the creation of 35,000 to 80,000 jobs in
the country as witnessed previously by the Stimulus Package, (Preston, 2017, 16). This
directly leads to the generation of revenue for the government as well as profitability that
comes from increased production and improved the purchasing power of the employees.
Generally, an increase in the minimum wage ensures that the Australian workers are
motivated thus enabling them to contribute more to the growth of the economy
The Australian Industry Group also made a submission to the panel stating that it
deems it fit for the minimum wage to be increased by 1.8%, (Preston, 2018, 27). hwoe3ver,
it continued to state that more increase could lead to a reduction in job security. This
increase may make many employees lose their jobs because their employers may not have
the capacity to pay them. Similarly, this leads to the reduction of job opportunities hence

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underemployment and unemployment in the country, (Bishop, 2018, 15). The Australian
Chamber of Commerce & Industry also stated that an increase in the minimum wage puts
many small businesses and start-ups at risk. This also directly affects employees who will not
have the opportunity to seek better pay elsewhere. In most cases, businesses are bound to
scale down and only hire employees that they can afford. Ultimately, productivity will
reduce thus starting a slowed growth of the country’s economy.
The extent to which this tripartite agreement approach on minimum wage determination
aligns with contemporary reward management to preserve both business competitiveness
and fair work conditions
Consultations have to be carried out for minimum wages to be established. This
entails engagement between government, employees, and employers. Coined by the
International Labour Organisation, all parties have to be represented and their views heard.
In determining the minimum wage bill too, it is essential to keep in mind the long-term and
short-term benefit of the decisions to be made, (Reeves et al, 2017, 640). The contemporary
reward management entails the need to accord all employees a justifiable minimum wage
that enables them to alleviate their lives. This is behind the backdrop of improving
employee living standards so that they do not mainly depend on the minimum wage, (Reilly
et al. 2018, 10).
Fair work conditions and business competitiveness can only be enhanced when
minimum wages are acceptable by all parties. In most cases, the balance between the type
of work and the wage being paid has to be balanced. Business operations, on the other
hand, depending on how the consumer market behaves, (Wilson, 2017, 264). A poor

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consumer market leads to a slowed economy which does not sustain itself hence the danger
of falling into recession. By involving different stakeholders, minimum wages are agreed on
hence the benefit of tripartite agreements to a larger extent.
Recommendations
It is essential to involve institutions during the determination of minimum wages. In
most cases, employees have to be involved so that they can air out their grievances.
Secondly, the government should set strict guidelines which employers have to follow and
pay accordingly. Many skilled employees have been noted to work extra hours only to get
meager payments which cannot sustain them. Lastly, it is upon the Fair Wage commission to
establish mechanisms which ensure that the minimum wages set go hand in hand with the
current economic needs, (Bishop Cassidy, 2017, 14).
Conclusion
In a nutshell, the issue of minimum wages has to be taken seriously. The rates in
which instances of poverty is setting in is alarming. Many employees have been known to
solely rely on a minimum wage which at times does not meet all their needs. By coming up
with minimum wage employees are not the only ones that benefit, rather the economy at
large. It is worth noting that there is a faction which comes in handy to support the needs
presented by employees. Bodies such as the Australian Council of Trade Unions and the
Australian Industry Group have been at the forefront providing insights into how the
minimum wages should be set. The Australian Industry Group has however cautioned on the

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increment of minimum wage bills because this may lead to a reduction of employees and a
poor business environment. High wages means that few businesses will be able to maintain
their workforce hence the need to reduce the workforce. This equally brings a problem. As
such it is prudent for all stakeholders o come up with a tangible minimum wage which can
be afforded by employers and which is also favorable for the employees. By adhering to this,
the economy is bound to grow.

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References
Bishop, J. and Cassidy, N., 2017. Insights into low wage growth in Australia. RBA Bulletin,
March, pp.13-20.
Bishop, J., 2018. The Effect of Minimum Wage Increases on Wages, Hours Worked and
Job Loss (No. rdp2018-06). Reserve Bank of Australia. 1- 18
Borland, J., 2017. Overview of research to inform the Annual Wage Review 2016-17.
Brennan, F. and Katauskas, F., 2017. Waiting for the trickle down effect. Eureka
Street, 27(7), p.37.
Chrisman, L., 2018. Tale of the city: the imperial metropolis of Heart of Darkness.
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Farbenblum, B. and Berg, L., 2017. Migrant workers’ access to remedy for exploitation in
Australia: the role of the national Fair Work Ombudsman. Australian Journal of
Human Rights, 23(3), pp.310-331.
McKenzie, M., 2018. The erosion of minimum wage policy in Australia and labor's
shrinking share of total income. Journal of Australian Political Economy, The, (81),
p.52.
Preston, A., 2017. Submission to the Government of Western Australia Ministerial
Review of the State Industrial Relations System. 12- 32

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Preston, A., 2018. The structure and determinants of wage relativities: evidence from
Australia. Routledge. 27
Reeves, A., McKee, M., Mackenbach, J., Whitehead, M., and Stuckler, D., 2017.
Introduction of a National Minimum Wage Reduced Depressive Symptoms in
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Reilly, A., Howe, J., van den Broek, D. and Wright, C.F., 2018. Working holiday makers in
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Wilson, S., 2017. The Politics of ‘Minimum Wage’ the Welfare States: The Changing
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Administration, 51(2), pp.244-264.