Catholic Social Services pours cold water on fair pay euphoria

Calculations by an economic research centre appear to back concerns expressed by Catholic Social Services that the Fair Pay Commission approved wage rise would not even compensate for inflation since the last pay rise almost 18 months ago.

While welcoming the Commission's historic first ruling to raise wages for low paid workers, Mr Frank Quinlan, head of Catholic Social Services (CSSA) had said in a statement that euphoria over the decision needs to be tempered by comparing wage increases with inflation.

"Workers on the Federal Minimum Wage of $484.40 a week will see a nominal increase of 5.65 per cent, but inflation over the relevant period has been approximately 5.4 per cent," Mr Quinlan said.

"It is not clear that low paid workers earning minimum wage rates over $510 a week are even keeping up with inflation," he said.

He says it is unfortunate that low paid workers are not getting a fair share of the country's economic prosperity.

"If wages at the low end of the scale can scarcely keep up with inflation in good economic times, how will low paid workers fare when the economic cycle changes?" he asks.

Calculations by the National Centre for Social and Economic Modelling (NATSEM) in a study for the Melbourne Age appear to reinforce CSSA concerns.

Although the wage rise will cost employers $33 a week, some battling families will pocket just $5 a week from last week's minimum wage decision after tax and welfare payments are clawed back by the Government, the Age says.

The harsh compound effect of extra tax and a cut in their parenting payment will rob some families where the mother stays at home to raise the children of 82 per cent of their $27.36 a week pay rise.

It found those hardest hit by the compound effect of tax and a rapid withdrawal of benefits once income grows are single-income families relying on the minimum wage.

In a typical minimum wage family with one salary and two children aged 8 and 10, a working dad would lose $9 in tax, while the stay-at-home mother would forfeit $13 in welfare benefits. That would leave them with just $5 extra a week.

"The high effective tax rates occur when income tax liabilities overlap with the withdrawal of welfare payments," NATSEM director Ann Harding told the Age. "It's the stacking of means tests on means tests."

What lies beneath the Fair Pay Commission's decision (Catholic Social Services Australia, Media Release, 29/10/06)
Wage rise 'will not cover inflation' (Courier-Mail, 29/10/06)
Low-earner families see wage rise evaporate (The Age, 30/10/06)

LINKS (not necessarily endorsed by Church Resources)
Minimum Wage Decision (Fair Pay Commission, October 2006)
Fair Pay Commission
Catholic Social Services Australia

Triple whammy for low income households: CSSA (CathNews, 3/8/05)
Brennan foreshadows lower minimum wage (CathNews, 2/5/06)
Employment body echoes concern on minimum wage (CathNews, 27/3/06)

30 Oct 2006