The minimum wage should be set at the level of a “living wage” to lift millions of people out of poverty, the Australian Council of Trade Unions secretary, Sally McManus, will say in a speech marking the 110th anniversary of the landmark Harvester decision.

McManus will signal a dramatic increase in union pay demands for the Fair Work Commission to set the minimum at a level that prevents poverty.

The living wage is defined as the level allowing a low-paid worker to support themselves and their family, for which the most common measurement is 60% of the median income.

Although McManus does not nominate the target of 60% of the median wage, she will say the current minimum wage of $36,000 a year “would not even come close” to the level required to pay for basic goods and services.

According to Acoss’s 2016 Poverty in Australia report, the 60% of median income poverty line is $1,074 a week for couples with two children, $818 for a lone parent with two children, $767 for couples only and $512 for a lone person.

In its 2017 decision the FWC raised the minimum wage to $18.29 an hour, or $694 a week, up by $22.20 a week.

McManus will argue that wages are both a cost to business and source of income for workers but the two sides of the same coin are not given equal weight but rather are “rigged” against workers.

The FWC sets the level of the minimum wage every year considering a range of factors including relative living standards but McManus will argue that most of the case is spent weighing whether a pay rise will harm international competitiveness, economic growth and unemployment.

“No consideration is given to whether the base on which the minimum wage adjustment is being build is fair and reasonable,” she will say.

Rather the decision looks only at inflation and growth in labour productivity, which usually caps the maximum pay increase the commission will order, she will argue.

In a paper titled Living Up to the Promise of Harvester, the ACTU argues that because half of award-reliant employees are in the bottom 30% of the income distribution, minimum wage increases would be a well-targeted way to decrease inequality.

The Acoss report found that, in 2014, three million people in Australia live below the poverty line of 50% of median income, including 731,300 children.

“When millions of working people have fallen into poverty, Australia needs a pay rise,” McManus said in a statement.



Australian Bureau of Statistics figures released in August show that in the past year wages grew by a record low 1.9% and Australia has recorded 20 consecutive quarters of falling wage growth for private sector workers.

In its 2017 decision the FWC said it was not obliged to “ensure that a single-earner couple family with children on the [minimum wage] has an equivalent disposable income that exceeds” the poverty line of 60% of the median income.



The Harvester judgment of 1907 set the living wage at a level to allow an unskilled labourer to support a wife and three children, in an era when most households had only a male bread-winner.

The FWC noted there has been a long debate in Australia about whether the minimum wage “should be expected to meet the expenses of a dependent family”.

It said that no party in the 2017 case had sought a level that “would enable a couple without dependent children to have sufficient income such that one able-bodied partner neither has to work nor seek work”.

According to the ACTU’s analysis of Australian Bureau of Statistics data over the last year the price of electricity has increased more than five times faster than inflation, while gas and utilities price increases are about four times faster than inflation.

“The promise of Harvester was financial security for working people, not barely keeping from starving and making endless sacrifices to keep the lights on,” McManus said.

Olisa Heard, a cleaner, told Guardian Australia she worked full-time at Craigieburn Central shopping centre in Victoria, and struggled to pay bills on her wage of about $19 an hour, or $750 a week.

“I’m the only bread-winner since my husband lost his job in 2009 due to his disability,” she said. “I have two girls, 21 and 16 years old, and my eldest one stopped university because it was so hard to juggle earnings to pay bills.

“Every-day living is tough: buying food is expensive, you have to pay for petrol to go to work and of course number one is the mortgage.”

Heard said her husband gets the disability support pension but it was “not that big” and the payments shrank as she earned more. She said she “couldn’t really feel the difference” after the FWC’s most recent $22 a week minimum wage increase, and backed the unions’ call for “a proper increase, more so that it fits the standard of living”.

In its 2017 decision the FWC said it accepted people in full-time employment “can reasonably expect a standard of living that exceeds poverty levels” while acknowledging its decision would not lift all award-reliant employees out of poverty, particularly households with dependent children and a single wage earner.



The FWC warned setting the minimum wage at such a level is “likely to have adverse employment effects on those groups who are already marginalised in the labour market” and could result in loss of employment or hours.