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Business leaders lambast Labor’s ‘living wage’

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Business leaders lambast Labor’s ‘living wage’

Bill Shorten

Business owners have angrily hit back at the suggestion that the minimum wage should rise to become a “living wage”, but Labor is yet to detail what such a rise would actually look like.

Speaking at a business summit in Sydney on Wednesday (6 March), Bill Shorten said that the existing minimum wage “is nowhere near a living wage”, and declared the upcoming federal election to be “a referendum on wages”.

In a video showing grabs from the speech subsequently posted on Mr Shorten’s Twitter feed, he stated that “the minimum wage is nowhere near adequate as a living wage”.

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“Award rates are now so far behind the market rates of pay that they actually belong in a different decade,” he said.

Mr Shorten continued: “If we are elected as the next government, we will fix the wages problem. We will restore Sunday and public holiday penalty rates arbitrarily cut by the Fair Work Commission. We will crack down on the shaming contracting and the rorting of skilled visas. We’re going to stop the use of labour hire being used as a tool to drive down wages and job security of permanent labour in a business.”

The video concludes with Mr Shorten stating that “business in the end will say well done, because business will benefit just as much as the workers when workers have more income to spend”.

A separate video since published by News Corp Australia shows Mr Shorten in an orange high-visibility vest speaking to workers about the issue.

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“Everywhere I travel in Australia, people tell me the biggest problem they encounter is that everything is going up except their wages,” he said.

“You should not have a full-time job in Australia and be working an hourly rate that leaves you in poverty. The minimum wage in this country is $18.93 an hour for an adult — very hard to live on.”

The video then cuts to a piece to camera, in which Mr Shorten implies that many Australians are racking up dangerous credit debts in order to make ends meet.

“It means that more Australians are living, in part, on their credit card just for their day-to-day essentials,” he said.

“So Labor wants to see a minimum wage in Australia which is a living wage.”

But the opposition leader is yet to spell out exactly how much a “living wage” would be under his proposal, other than the aforementioned changes to penalty rates.

Business community hits back at wage hikes, lack of consultation

Following Mr Shorten’s speech, James Pearson of the ACCI suggested that “Labor’s position seems entirely focused on pushing up wages, without any regard for the capacity of businesses, particularly small businesses, to afford to pay”.

Mr Pearson also said that increasing the national minimum wage to reflect a so-called living wage could cost the economy “more than $8.7 billion per year”.

A number of stunned My Business readers were quick to vent their opposition to a higher minimum wage.

“Such a move will most definitely result in the loss of one out of a team of five employees. A great many of the other small businesses I work with will almost certainly be in the same position,” said one.

“As a small business owner AND more mature person with negatively geared property WHY [on] earth would you vote labour [sic] unless you want to have worked 60 hours plus a week for nothing. They will NOT be getting my vote,” replied another.

“In small business you can’t spend what you don’t have, you can only do that in government but that will soon run out as well the way we are going,” said a third.

A fourth said that “small business again is being used to pick up the tab for the government’s inability to do their own budget and for not using the money from the people for the people”.

Some comments, such as the one below, noted the associated costs to business for each employee go well beyond the actual pre-tax wage the worker receives, a fact that often gets lost in the wider debate about wages:

“For a full-time employee on $23 per hour working a standard 37.5 hours per week, taking 10 sick days plus 10 paid public holidays p.a., with a 5% workers comp premium, no payroll tax payable by the employer, and the employee having 100% productivity/chargeable hours, the actual cost per hour actually worked by that employee is $31.67. If the same employee is only 80% productive/chargeable then the cost per hour actually charged is $39.59. In the second case, this means that the employer has to charge that employee out at about $44 per hour including GST just to break even. Note that this doesn’t take into account any chargeable hours lost due to poor weather, CPD, TAFE etc. Yo[u] may as well sit on the beach and go broke rather than keep paying wages and charging out at the wrong rate.”

Others expressed frustration at both sides of politics, with one suggesting that “it is time all candidates in both major parties were refreshed by replacing them”.

But the undercurrent of most of this feedback was criticism at a lack of consultation with employers about the issue.

Instead of off-the-cuff remarks in the lead-up to the election that have the potential to create fear and uncertainty, business leaders implored politicians to take a considered, consultative approach to policy formulation.

One My Business reader said:

“This is why the government and the business community need to sit down and work out a plan together for growth in business and living in general. When the government makes snap decisions without consultation from the business or general community like, let’s have a ‘living wage’, they first need to see how this can be done. That is where consultation with the community and business will create a stronger vision for this country. We are a democracy, are we not? Decisions for the welfare of the people of this country and its increased development should be created by all.”

For the record, however, not everyone was against the idea of having minimum wages more closely reflect the cost of living.

“If a living wage means just enough to scrape by on, [then] if the minimum wage is less it is not enough,” one reader said.

“When people have money to spend, they spend it on products that create more business. Not rocket science here. How dare staff have enough to live on?” added another.

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