Ai Group has today filed its post-Budget submission concerning the Annual Wage Review being conducted by the Expert Panel of the Fair Work Commission.
The national employer association has proposed an increase to the National Minimum Wage and modern award minimum wages of 3.8 per cent for the 2023-2024 financial year, Chief Executive Innes Willox said today.
"Such an increase is less likely to exceed the capacity of businesses to pay in the deteriorating economic environment or threaten major disemployment effects than a larger increase, such as that proposed by the ACTU," Mr Willox said.
"The quantum proposed by Ai Group would strike a responsible balance in the context of the various competing considerations that must be taken into account by the Commission.
"Since we filed our Reply Submission, updated Australian economic data regarding retail turnover, household spending and total wages have been published, along with new national economic forecasts by the RBA in its 'Statement of Monetary Policy' and the Treasury in the Budget.
"This newly available data supports arguments previously made by Ai Group — that the Panel should take a cautious, responsible and balanced approach in the 2023 AWR.
"The determination of an appropriate increase must be moderated by sustained cost pressures felt by employers, anaemic profitability and productivity growth across a raft of industries, as well as the increasingly sober forecasts of low levels of economic growth and impending headwinds.
"It is vital that the Commission ignores calls for a simplistic approach to grant wage increases at a level that chases inflation. A more nuanced approach is required in the interest of all parties.
"The Australian economy is demonstrably slowing, with key economic indicators continuing to decline. New forecasts issued by the RBA and Treasury predict that growth in GDP, household spending, business investment and employment will decline considerably over the next two years.
"While new CPI forecasts predict inflation will fall slightly faster than previously expected, high inflation will remain persistent until at least the end of 2024.
"In line with these deteriorating economic circumstances, it remains critical for the Panel to adopt a cautious approach to adjusting minimum wages.
"An excessive increase would fuel inflation and require additional monetary policy tightening by the RBA than would otherwise be the case. Lower employment growth, higher inflation and higher interest rates would have a particularly harsh impact on the low paid and women.
"The impact of the significant cost-of-living relief that will be channelled to Australia's lower and low-to-middle income households in accordance with Budget announcements must also be weighed and would have further moderating effect on the need to grant a comparatively high increase.
"It is appropriate that relief is provided through measures that target those that most need it, and that the Government looks to more than the blunt instrument of wage review decisions to provide such assistance.
"In advancing a 3.8 per cent increase, we observe that employers will also need to provide employees with a further 0.5 percentage point increase in relation to superannuation obligations.
"We also urge the Expert Panel to be particularly mindful of the cumulative impact of granting a further very significant quantum of increase on the back of granting large increases in last year's decision," Mr Willox said.
Read Ai Group's full submission here
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