A 7% National Minimum Wage rise for low paid workers would help tackle the rising cost of living for those on award wages while having a virtually undetectable impact on economy-wide prices, new research from leading economists at the Centre for Future Work has found.
Key Points:
- The national minimum wage (NMW) has increased less than inflation for the past two years
- By June the NMW will be at least 4.2% in real value below where it was in 2020
- The ACTU’s call for a 7% rise would at most cause economy-wide prices to increase by an average of 0.4%
- Over the past 25 years there has been no correlation between increases in the NMW and inflation growth over the following year
- With company profits at historic records, companies could readily absorb the costs of a higher minimum wage through a reduction of just 1.4% in total company profits
“This research shows that for low paid workers struggling with the cost of living a 7% wage is a solution to, rather than the driver of, inflation,” said Dr. Greg Jericho, Policy Director at the Australia Institute’s Centre for Future Work.