Imagine if Australia’s minimum wage was enough to live on?
It’s not such a crazy thought. There are countries in the world where this is not just possible, it’s built into government policy.
If you want to know why Australia’s minimum wage has been steadily decreasing, catch up on our first blog in this series: Why Australia’s minimum wage is broken. It’s always helpful to understand a problem, if we want to find a solution.
So, let’s talk about how can we provide a minimum wage that actually makes sure workers in Australia have a living wage.
“As unionists, one of our core convictions is that even on the minimum wage, you should not have to worry about affording the basics in life. You should be able to pay your bills and rent, have enough money for food and still have some left over to enjoy your life,” explains UWU National President, Jo Schofield.
“In a country as wealthy as ours, there’s simply no reason why anyone working full-time should ever be in poverty.”
Where does Australia sit on the global ladder?
As discussed in our first blog, the OECD determines that a minimum wage should be at least 60 per cent of the adult median wage.
The gap between a country’s minimum wage and people on middle incomes is called the ‘minimum wage bite‘.
If a country scores highly, it means workers on the minimum have better-paying jobs.
Although Australia’s minimum wage bite used to be above 60 per cent, by 2021 it had fallen as low as 51 per cent.
Australia used to have one of the highest minimum wages in the world. Figures from 2023 show that we’re hovering in the middle of the pack, at number 14.
We’re definitely higher than the United States at 27 per cent (but their minimum wage is an atrocity!).
We’re doing better than Japan at 46 per cent. Workers in Ireland on the lowest wage aren’t doing that great either, at 48 per cent.
But countries above us include the United Kingdom at 58 per cent and New Zealand at 71 per cent.
Some countries set their minimum pay rate differently, which can have a big impact on how much workers on these wages are paid.
For example, in the UK, the Low Pay Commission advises government on increases to the National Living Wage. Note, it’s called living wage, not minimum wage. Their initial target was 60 per cent of median earnings.
How does Australia compare to other countries?
Click here to scroll to the bottom of this page and see the global leaderboard.
In the US, the federal minimum wage hasn’t increased since 2009. However, the states and even some local governments have set their own minimum wage that’s higher, after unions waged enormous campaigns to “Fight For 15”.
Former Assistant Secretary of the Australian Council of Trade Unions Tim Lyons explains:
“The federal minimum wage is US$7.25 an hour. But in places like California, Washington State and New York, it’s around $15 an hour.”
Germany didn’t even have a minimum wage until 2015, because they had such a good collective bargaining system. At the time, there were predictions that low-wage jobs were going to be destroyed, which did happen. Tim Lyons explains how.
“What happened was they turned into much higher paid jobs. And the low-paid jobs were substituted by technology. The employers started spending money on capital”.
What’s clear is that Australia has lost its way. There’s a gaping chasm between workers on low pay, and those in the middle, and it’s getting wider.
Meanwhile, corporate profits are booming and CEOs gift themselves mega-salaries and eye-watering bonuses. We must turn this around.
“You should be able to pay your bills and rent, have enough money for food and still have some leftover to enjoy your life”
So, what system could improve things?
Unfortunately, no country has the perfect solution.
“There’s no magic. It’s a choice that a society makes about how much value we place on people at the bottom end of the labour market,” Tim says.
But there are a few things that could make a real difference to people on minimum and award wages.
1. We need to change the way we think about the minimum wage
We shouldn’t think of the minimum wage as a safety net. It should be a foundation.
As Tim Lyons says, “A safety net is something that catches people when they fall through the cracks. A foundation holds people up”.
We should think of it as a living wage, not a minimum wage.
2. We need more government intervention
According to Tim, we need the Federal Government to rethink what the role of the minimum wage and award wages are.
“Is it something just for people who are on the bones of their arse or are we talking about creating a living wage where people can live with dignity?” he asked.
3. We need a goal, well above 60 per cent of the median
Like the UK, we need to set a bold target for where our minimum wage should be – one that will help us eliminate working poverty.
Tim Lyons says we should have “an ambition to have the minimum wage pegged at (say) no less than 60 per cent of the median, which is the OECD definition of low pay.”
Jo Schofield agrees, but adds that “once we hit that target, we should then aim even higher.”
The UK now has a target of 66 per cent of median earnings and their unions have been pushing to take their national target even higher, up to 75 per cent.
“If we keep going the way we’re going, the minimum wage will keep dropping compared to average income, making it even harder to make a living wage,” Jo warns.
What’s the next step?
UWU National President Jo Schofield is convinced we need change – and we need it now.
“The minimum wage is absolutely essential to members of our union.
“It’s not acceptable for them or the millions of others who rely on the minimum and award wages to keep going backwards, unable to afford decent housing and living in fear of their next bill.
“That has to change and we need to lead that change,” Jo says.
Do you agree? Then, it’s time to join our fight for a fairer and better Australia.
