Low Wage Growth Australia’s Biggest Challenge

Treasurer Scott Morrison has declared record low wage growth the “biggest challenge” facing the Australian economy.

His comments come after the federal government cautiously endorsed the Fair Work Commission’s decision to reduce Sunday penalty rates for thousands of hospitality and retail workers, arguing it was an independent body with the power to make such decisions, abc.net reported.

That triggered a fierce political fight, with the federal opposition accusing the government of failing to protect the income of thousands of low-paid weekend workers. But Morrison Monday told Bloomberg he was committed to ensuring workers took home more money each week.

“The biggest challenge we have is to ensure what Australians are earning every week is increasing,” he said. “We’ve had flat wage prices; our wage price index has been flat for some period of time now. Increasing what Australians earn—whether it’s wage earners or small businesses—is what I think is the big challenge now.”

The Fair Work Commission cited economic benefits as a reason for its cut in penalty rates. There has been a mixed response from retail and hospitality workers likely to be affected by penalty rates changes.

Morrison said workers would never be able to earn more if their workplaces were closed or their bosses were struggling to earn a profit. “You’re not going to earn more if the business isn’t open, you’re not going to earn more if the business isn’t earning a profit,” he said.

“So the profitability of businesses small, medium and large is critical to Australians earning more, and that’s why we’re focused on that, on investment to drive that profit growth.”

The commission’s decision to reduce penalty rates came 24 hours after the Australian Bureau of Statistics revealed the lowest wage growth since records began in the late 1990s.

Prime Minister Malcolm Turnbull has previously argued that reducing Sunday rates will enable businesses to employ more Australians, boosting employment across the country.

Morrison has previously argued for cuts to the corporate tax rate to increase employment and counter subdued wage growth.

Labor has seized on the penalty rate decision, describing it as nothing more than a pay cut that will reduce the standard of living for “millions” of Australians.