Australia could have the world’s highest minimum wage under Labor plan

However, European nations including France have been under pressure from anti-government protesters, prompting leaders to promise minimum wage increases.

Deloitte Access economist Chris Richardson said Australia was already near the top of the global minimum wage relative to median wages and unemployment benefits.

“We use wages as a second social security system,” Mr Richardson said.

He said Labor and the ACTU’s proposals were not “a great idea, but not the world’s worst idea either”.

“Over the last decade the academic evidence has shifted a little towards saying there is less danger [to raising the minimum wage].”

Any hike to Australia’s minimum wage would flow on to workers covered by awards, Australian Industry Group’s Stephen Smith said, as the Fair Work Commission tended to pass on the same percentage wage increase across all classifications.

If the Commission agreed to align the national minimum wage with the ACTU’s two-year target of 60 per cent of median earnings, he said, “it would more than likely apply the same large increase to all award rates – including those that are already well above [the living wage target]”.

“An increase of this size would be very harmful for businesses, workers and the Australian economy. It would destroy Australian jobs and investment.”

The escalation of the wages debate comes as new figures show the number of Australians working second jobs has risen to 1 million, as employees increasingly juggle multiple jobs to combat sluggish wage growth and underemployment.

The Australian Bureau of Statistics found this represented more than 7 per cent of all jobs worked in the economy, the highest rate recorded since this analysis began in 2010.

In the three months to December alone, the total number of secondary jobs was more than double the quarterly average over the past five years.

Business groups, analysts and the Coalition government say Labor’s plan to convert the minimum wage to a “living wage” could have the perverse effect of limiting the number of jobs available as businesses cut down on hours and workers.

Opposition Leader Bill Shorten defended his living wage push, saying: “The economy isn’t working in the interests of everyone”.

“While the balance is tipped away from working Australians, we are going to see more people forced into situations where they will have to take a second job,” Mr Shorten said.

Labor’s employment spokesman Brendan O’Connor did not rule out following in the footsteps of the Victorian state government and NSW Labor, which have raised or committed to raising the wages of public servants such as teachers and nurses.

Such a shift would push public sector wages above 3 per cent and increase wages for 800,000 workers nationwide, costing the budget billions while putting pressure on private sector pay packets.

Dana is health and industrial relations reporter for The Sydney Morning Herald and The Age.

Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age.

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