Australians are doing better than many of them probably realise
long been at the leading edge of minimum wages. The state of Victoria was the second place in the world to introduce a wage floor in 1896, beaten only by New Zealand. A landmark legal case in 1907 took a more expansive view of a fair wage, ruling that it should be enough to maintain a family with three children in “frugal comfort”. Australia is still at it: it now has the world’s most generous minimum wage, reclaiming a distinction it last held more than a decade ago.
That makes the high minimum wage all the more notable. The Fair Work Commission, an independent panel that sets the minimum wage after considering submissions from industry and the unions as well as academic research, raised it by 3% this year, after increases of 3.5% in 2018 and 3.3% in 2017. These rises have outpaced both inflation and broader wage growth, and have helped give low-end workers a somewhat bigger share of national income.
It used to be an article of faith among economists that higher minimum wages would cause job losses, but data from Australia add to evidence that counters that assumption, at least as long as increases are gradual. A study by the Reserve Bank of Australia , the central bank, examined minimum-wage increases between 1998 and 2008, and found no discernible effect on employment. Similarly, over the past five years, Australia’s unemployment rate has fallen steadily.
The value of the minimum wage is especially important in Australia since the pay of so many workers is linked to it. Under a national system of industry-wide salary awards, pay in many jobs, from cabin crew to funeral directors, is in effect indexed to the minimum wage. Every time the minimum wage goes up, so does the pay of nearly a quarter of Australians, making it a powerful lever to affect the economy as a whole.seems pleased with the boost to wages.
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