Minimum Pay Fiasco

The Last Bite of WorkChoices

Workplace Relations Minister Julia Gillard: Why was the Fair Pay Commission was still in business, and capable of handing down such a decision?

As former Prime Minister John Howard pounds the pavements of Wollstonecraft on his daily walk, he must be grinning from ear to ear. On 7 July 2009 the Fair Pay Commissioner Professor Ian Harper delivered Howard a final swipe at the old Industrial Relations Club by announcing that the Commission would refuse an increase in the $543 per week minimum wage in the current economic circumstances. Harper claimed the decision would protect jobs. Australia’s lowest paid workers were being asked to fund this dubious job protection gesture.

The low paid might be wondering why a Labor Government offers them $900 in one hand and then allows a government agency to economically knife them. The ACTU has rightly condemned the Commission’s decision; on behalf of Australia’s lowest paid workers it might also have asked why the Fair Pay Commission was still in business, and capable of handing down such a decision?

The new Fair Work Authority was up and running by 1 July; why had not the Fair Pay Commission already disappeared, its minimum wage setting role handed over to the new Authority? Workplace Relations Minister Julia Gillard reminded Australians – after the decision – that this ruling was the Commission’s last before its termination. That’s too late for workers already being asked to bear the worst impacts of the financial crisis.

The Fair Pay Commission was established by the Howard Government as part of a strategy to marginalise the Australian Industrial Relations Commission, seen as too close to the union movement and the spiritual home of the Industrial Relations Club, which Howard and the New Right despised. The Fair Pay Commission was intended by Howard to provide a minimum wage setting mechanism more conducive to the wage cutting ambitions of WorkChoices.

Economists are divided about the job protection merits of denying wage increases. Some argue it protects jobs; others argue that low paid workers in particular spend their modest wage increases – they usually must do so, to get by – and thus stimulate the economy, and employment.

By Mark Hearn

Published 9 July 2009.