Background
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.
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 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).
Stakeholders Involved in Minimum Wage Determination
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 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 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.
Contrasting Interests of Stakeholders
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 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.
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. In Postcolonial contraventions. Manchester University Press. 13
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
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 Low?Wage Workers: A Quasi?Natural Experiment in the UK. Health economics, 26(5), pp.639-655.
Reilly, A., Howe, J., van den Broek, D. and Wright, C.F., 2018. Working holiday makers in Australian horticulture: labor market effect, exploitation and avenues for reform. Griffith Law Review, pp.1-32.
Wilson, S., 2017. The Politics of ‘Minimum Wage’ the Welfare States: The Changing Significance of the Minimum Wage in the Liberal Welfare Regime. Social Policy & Administration, 51(2), pp.244-264.
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