Kelty warns ALP on wages


For­mer ACTU sec­re­tary Bill Kelty has cau­tioned that La­bor’s pro­posed liv­ing wage must be phased in sen­si­bly and re­spon­si­bly, and be linked to pro­duc­tiv­ity gains, or it could risk a wages blowout and a “cost spike” for the econ­omy.

The long-time union chief and ar­chi­tect of the 1980s and 90s Ac­cord sup­ported the liv­ing wage pro­posal, say­ing it would be ben­e­fi­cial for the coun­try, pro­vided that it was eco­nom­i­cally af­ford- able and ab­sorbed into the wages sys­tem.

“La­bor and the unions need to take into ac­count the eco­nomic ca­pac­ity of the na­tion and of in­dus­try to af­ford a min­i­mum wage in­crease,” Mr Kelty said. “The econ­omy is slow­ing, or grow­ing mod­er­ately, and pro­duc­tiv­ity has to lift to af­ford an in­crease in the min­i­mum wage.”

Mr Kelty’s com­ments come as La­bor will to­day urge the Fair Work Com­mis­sion to award an above-in­fla­tion min­i­mum wage in­crease to low-paid work­ers from July 1. In a sub­mis­sion to the com­mis­sion, La­bor pro­poses a “fair and eco­nom­i­cally re­spons- ible real in­crease” in the min­i­mum wage that recog­nises that no full­time worker should be liv­ing in poverty; pro­duc­tiv­ity and prof­its have risen faster than wages; and “ev­ery­thing is go­ing up ex­cept for peo­ple’s wages”.

Mr Kelty warned that in­dus­try needed time to ad­just to big wage in­creases, “and they can if it is done over a longer pe­riod and there is ab­sorp­tion”.

“It is nec­es­sary to keep Aus­tralia’s wages sys­tem work­ing prop­erly,” he said. “We are a high­growth and high-wage econ­omy.

“If it is not ab­sorbed, the min­i­mum wage goes up and feeds into en­ter­prise bar­gain­ing agree­ments that are al­ready above the min­i­mum wage, and then those agree­ments will have to go up, and then you can de­stroy the wages sys­tem and in­flate the econ­omy through wage in­creases.”

Scott Mor­ri­son hit out at Bill Shorten yes­ter­day over La­bor’s push for an above-in­fla­tion rise in the min­i­mum wage, say­ing the Op­po­si­tion Leader had “no em­pa­thy and no clue” about the pres­sures fac­ing small-busi­ness own­ers. The Prime Min­is­ter said they would be forced to “sack work­ers” if Mr Shorten won the elec­tion and drove up the min­i­mum wage.

Mr Kelty, who was ACTU sec­re­tary from 1983 to 2000, is a men­tor to Mr Shorten. He re­called the ACTU’s liv­ing wage claim in 1996, which sought an in­crease in the min­i­mum wage and staged safety net in­creases for those on en­ter­prise bar­gain­ing agree­ments who had not re­ceived pay rises.

“We pro­posed big­ger ad­just­ments but they were phased in over a long pe­riod,” he said. “If there is no ab­sorp­tion there can be huge cost im­pli­ca­tions. It should be done in­dus­try by in­dus­try, and phased in.”

Mr Kelty said a new liv­ing wage would be a “pos­i­tive” for the econ­omy and sug­gested that La­bor could leg­is­late to pro­vide guid­ance to Fair Work Aus­tralia to make a de­ter­mi­na­tion on a liv­ing wage ad­just­ment.

“You can easily man­age a liv­ing

wage ad­just­ment if you do it re­spon­si­bly,’’ Mr Kelty said.

“Wages will be higher in ag­gre­gate terms and de­mand will in­crease. It also makes en­ter­prise bar­gain­ing work more ef­fec­tively.

“When you look at the mod­ern econ­omy, es­pe­cially given au­to­ma­tion, there is a good ar­gu­ment for in­creas­ing wages in a sen­si­ble way and also lift­ing su­per­an­nu­a­tion in a sen­si­ble way.

“The prin­ci­pled po­si­tion is quite sim­ple: should peo­ple work­ing full-time live in poverty? That is the start­ing point for a gov­ern­ment to out­line a philo­soph­i­cal po­si­tion, and then the com­mis­sion can then set the right rate.”

La­bor has promised to con­sult on the de­tails of its plan to in­crease wages but would leave it to the Fair Work Com­mis­sion to de­ter­mine.

Man­u­fac­tur­ing em­ploy­ers called yes­ter­day for the min­i­mum wage in­crease to be lim­ited this year to $14.40 a week, ar­gu­ing that busi­nesses were strug­gling with higher costs and pro­duc­tiv­ity growth was weak na­tion­ally.

Aus­tralian In­dus­try Group chief ex­ec­u­tive Innes Wil­lox said the mod­est 2 per cent rise was war­ranted, given the econ­omy had moved back into the slow lane and “looks set to stay there for some time”. The claim is slightly higher than the $12.95 per week rise pro­posed by the Aus­tralian Cham­ber of Com­merce and In­dus­try.

The ACTU, which is seek­ing a $43-a-week in­crease, crit­i­cised Restau­rant and Cater­ing Aus­tralia for propos­ing no in­crease.

Mr Wil­lox said the ACTU claim, if granted, would in­flict harm on busi­nesses and low-paid work­ers. “Now is not the time for risky move­ments in min­i­mum wages,’’ he said.

The Na­tional Re­tail As­so­ci­a­tion, which last year called for no in­crease, will sup­port a 1.8 per cent in­crease in line with the in­fla­tion rate, fol­low­ing a sur­vey of its mem­bers.

“We do think there should be some type of in­crease,’’ said the as­so­ci­a­tion’s chief ex­ec­u­tive, Do­minique Lamb.


Bill Shorten dur­ing a visit to a fac­tory in West Footscray, Mel­bourne, yes­ter­day

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