This article is more than 1 year old

This article is more than 1 year old

Labor has argued that a “significant” increase in the minimum wage will not cost jobs but failed to follow the lead of the Victorian government in nominating how much workers should be paid.

In submissions to the Fair Work Commission’s annual minimum wage review, due on Friday, demands have ranged from no increase – a real wage cut – advocated by Restaurant & Catering Australia to the Australian Council of Trade Union’s call for a $43 a week increase.

After Labor promised to indirectly push the minimum wage higher, debate has raged about the extent to which an increase would hit the unemployment rate, with Scott Morrison accusing Labor of risking jobs.

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Guardian Australia understands the federal government will follow its usual practice of making a factual submission which details the state of the economy but makes no recommendation for a wage rise.

The Australian Industry Group has called for a “modest wage increase” of 2%, or $14.40 a week, slightly higher than the Australian Chamber of Commerce and Industry’s call for 1.8%, or $12.95 a week, which was backed by the National Retail Association.

The Victorian Labor government has called for the minimum wage to rise from $18.93 an hour to $20, a 5.65% increase closely in line with unions’ demands for a 6% rise.

The South Australian Liberal government did not nominate a “specific increase” but urged a “a conservative, cautious approach”.

It suggested the commission must recognise “the impact on business, employment growth, inflation and the sustainability, performance and competitiveness of the national economy, and the employment prospects for award-reliant employees”.

RCA chief executive Juliana Payne told Guardian Australia the minimum wage setting process is an “adversarial system” featuring “a bunch of ambit claims and the commission lands somewhere in the middle”.

But she defended the organisation’s claim for a real wage cut, labelling it a “genuine request for moderation after the last five years of above-inflation increases”.

Payne said the RCA did not have “specific evidence” of the impact of a pay increase on jobs because employers in the industry are dispersed. “But we know it happens: we hear it from our members, we see it.”

At a doorstop on Thursday, Scott Morrison said that Labor’s proposal to change the rules used by the Fair Work Commission to set the minimum wage would “force businesses … to sack workers”.

“What Bill Shorten is doing now is telling them: ‘You choose who needs to go, to enable you to meet your wages bill’.”

But in its submission, Labor argues that international evidence shows that “significant increases in the minimum wage can be sustained without costing job”.

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It cited a Reserve Bank of Australia research paper which found that “modest, incremental” wage increases do not harm jobs or hours, although it also warned “the results may not necessarily generalise to large, unanticipated changes in award wages”.

Labor argued the minimum wage should be set at a level so that “no Australian working full-time should be living in poverty” and that the economy will benefit because “persistently low wages growth poses a real threat to consumer demand”.

The shadow industrial relations spokesman, Brendan O’Connor, said that federal Labor has been arguing for increases in the minimum wage for four years “unlike the Liberals who consider low wages a deliberate design feature of the economy”.

“Labor believes in a fair day’s pay for a fair day’s work and a living wage is fundamental to achieving that goal,” he said.

University of Adelaide law professor Andrew Stewart told Guardian Australia that since then evidence from the UK and United States suggests the commission could award “more than very small increases to minimum wages without having an adverse impact on employment”.

The Australian Chamber of Commerce and Industry workplace relations director, Scott Barklamb, responded that the minimum wage in those countries came “off a low base”.

“We don’t have one minimum wage in Australia, we have at least 2,000 in various awards, and they go right up the scale of earnings and skills distribution. It’s different to a US state with a single statutory minimum wage,” he said.

Employers fear that the national minimum wage increase will flow on to minimums in awards, and that the commission’s previous two increases of 3.5% and 3.2% were already above inflation.

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The Australian Industry Group chief executive, Innes Willox, said the last two rises were “exceptionally high and out of step with overall wage movements and economic settings”.

“Inflation remains weak which means that even a small rise in the minimum wage will deliver a real increase in household spending power.”

Barklamb said it was an “extraordinary proposition” for unions to argue the minimum wage was inadequate because it is the third-highest in the world in terms of purchasing power.