When Anthony Albanese whipped a dollar coin out of his suit pocket at the midway point of the election campaign, the issue of wage rises took centre stage.
While his off-the-cuff suggestion that wages should “absolutely” keep pace with inflation was ridiculed as a gaffe by the former government, Albanese doubled down, nailing his colours to the mast as a leader who believed in real wage rises.
The contrast with Scott Morrison was stark, and allowed Albanese to present to voters a genuine ideological and political difference at a time when people were cynically wondering if a change of government was worth a punt.
After the election, Albanese followed through with his pledge to make a submission to the Fair Work Commission calling for wages to keep pace with inflation, and on Wednesday, the commission president, Iain Ross, delivered.
The dollar coin was back again, with Albanese wielding it like a trophy and happily declaring the government had delivered.
“It makes a difference to people who are struggling with the cost of living and it justifies our position that we took in making a different submission to the Fair Work Commission,” he said.
The minister for employment and workplace relations, Tony Burke, went even further, saying “the era of wages being kept deliberately low by the Liberal and National parties effectively came to an end today”.
While wages are still likely to fall behind in real terms as inflation clocks up to 7% by the end of the year, the decision for a 5.2% increase to the minimum wage is a significant early political win for the Albanese government and will offer some small reprieve to the country’s lowest paid.
The decision shows Albanese to be on the side of workers at a time when many are doing it tough with the cost of living, and endows the government with authority, with the commission appearing to respond positively to the Albanese government’s recommendation.
If the commission had sided more closely with employers and delivered a sub-inflation wage increase, Albanese would have been left looking impotent, and potentially in breach of what many perceived as an election promise.
The decision also puts the opposition in a tricky position as it is tested on its claim to want to reassert itself as the party of small business. Small business won’t like the wage increase – will Peter Dutton?
Ross said he had considered arguments put forward by business that the sharp rise in inflation would impact business profitability, but said the FWC was conscious that the low paid were particularly vulnerable in the context of rising inflation.
While Albanese can mark the ruling down as a win, the economic waters over the next 12 months remain choppy. The Reserve Bank governor, Philip Lowe, on Tuesday night suggested inflation would reach as high as 7% by the end of the year, with more rate rises forthcoming.
This means despite six months of real wage rises, workers will quickly fall behind again before too long, and will naturally look to the government for further help. They won’t be alone, with growing calls for the government to review the Jobseeker payment as those on welfare get left even further behind.
This will be difficult time for Albanese and his treasurer, Jim Chalmers. As the government faces calls for more financial assistance as costs continue to go up, it will also need to be keeping a lid on inflation to try to eventually ease cost of living pressures.
The government will be hoping the global factors contributing to inflation will soon ease, but this depends on Covid-related disruptions to supply chains and the war in Ukraine resolving.
After years of government pandemic stimulus payments and unprecedented monetary support from the Reserve Bank, the tide has now turned at the same time as many people will be needing help more than ever.
Today’s minimum wage hike is a step in the right direction, but it may prove to be a relatively easy win given the challenges ahead.
