The Australian Fair Pay Commission has handed down its first decision.
The Australian Fair Pay Commission has announced its Federal Minimum Wage decision for October 2006.
The Commission announced an increase of $27.36 per week for minimum wage rates up to $700 and $22.04 per week for minimum wage rates $700 and above.
So my prediction was too low. Given that the ACTU asked for $30/week, anyone walking along Swanston Street can probably hear the corks popping (did the AIRC ever give the unions 91% of what they asked for?).Â At least until the next decision, it’sÂ going to be very hard for the union movement now to argue that the AFPC gives lower minimum wage increases than the AIRC.
The whole decision is worth reading. In sections 2 and 3 (pp.66ff), the commission quickly demonstrates why economists are better job than lawyers in synthesising economic research. And Appendix F (pp. 176ff) neatly summarises the research that’s been done, and is forecast for the future. My only quibble is that the commission misquoted my estimated elasticity of labor demand (it’s -0.3, not -0.15), but that’s mostlyÂ my fault, since the corrected number was published in a subsequentÂ erratum to the paper.
The decision comes into force on 1 December 2006, except if the High Court overturns the industrial relations laws, in which case the minimum wage will be back to $484/week. Our morning tea hypothetical: supposeÂ an employer raises their workers’ pay from $484 to $511 for the first week of December, at which point the High Court scraps the IR laws. Could an uber-stingy employer then ask each of their workers to pay back $27?