Australia’s Debate Over Wage Floors Intensifies as Economy Faces Slowdown

Some experts fear that a further increase in the minimum wage will have a negative impact on employment opportunities and the economy.

MOSCOW, January 26 (Sputnik) — A number of Australian economic experts have started reconsidering the government’s policy of minimum wage, fearing that a higher wage floor could have a negative impact on the domestic situation in the country that is currently facing economic slowdown, according to Market Watch.

Supporters of a higher minimum wage policy in the US have always mentioned  Australia's $16.88 an hour minimum wage as an example that high wage floor do not necessary suppress a country's economic growth. However, Australian experts themselves are currently not so sure about the advantages of such policy, insisting on a slowdown in further minimum wage increases.

Australia has increased the minimum wage almost annually since the late 1990s. The country has not suffered a recession for nearly 20 years, according to the Washington Post. The minimum wage for workers older than 20 is 16.87 Australian dollars ($13.55) an hour, nearly two times higher than the federal minimum wage level in the US.

However, some experts argue that this level, having been justified in a time of economic boom, is currently hampering job opportunities for low-skill workers.

“Low-paid workers including cleaners, retail and hospitality staff, child care workers, farm labourers, and factory workers will fall even further behind the rest of the workforce," Dave Oliver, representative of Australian Council of Trade Unions, said cited by the Guardian.

"This has not been a large problem through the boom. But it will be more and more important in the harder times ahead, because high minimum wages inhibit growth in jobs for workers on the edge of the labor force," echoed Ross Garnaut said, an economic adviser to Australia's government in the 1980s.

A number of experts also argues that a further rise of Australia’s minimum wage would have negative impact on small businesses' hiring decisions.

“It will simply exacerbate the problem of many businesses in Australia, so that's not a good outcome for anyone," said Kate Carnell, chief executive of Australian Chamber of Commerce Industry, in summer 2014, when a minimum wage increase was discussed.

Wage floors are also being discussed in the US. However, Republicans in Congress have turned down President Barack Obama's proposal to increase the federal minimum wage to $10.10 from the current $7.25.