Minimum wage issues in Australia- some excellent advice from the Australia Forum

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Foreign workers in Australia need to be aware of the minimum wage

Over the last few months there has been a raft of information, regulation changes and new guidelines introduced with regards to the Australian immigration system. While many of these will eventually help to streamline the system and make processing applications as simple as possible, many foreign workers in Australia may well have missed the recent update on the Australian national minimum wage. The Fair Work Ombudsman has recently highlighted this issue amid concerns that some foreign workers currently in Australia and looking to move to Australia may be unaware of the rise.

What is the national minimum wage in Australia?

The new national minimum wage, as of 1 July 2013, is AU$622.20 per week or AU$16.37 per hour and is something which all employees are entitled to unless they are covered by a previous award or agreement. The recent increase equates to a rise of 2.6% on the previous Australian national minimum wage and will be well received by those at the lower end of the income spectrum.

More and more countries are now introducing national minimum wages to combat the ever-growing number of abuses of the system. This is an issue which has been ongoing in Australia and the 457 visa saga has highlighted this problem over recent months. Despite the fact there are a variety of legal obligations and legal pathways down which the authorities can move it seems that a small minority of employers in Australia have allegedly been abusing the system with regards to foreign workers.

 Is abuse of foreign workers rife?

It would be wrong to suggest that the abuse of foreign workers on 457 visas is rife but it is an issue which has been highlighted as we approach the next general election in September. There have been accusations of commissions, loans and a variety of other payments demanded by employers in direct contradiction of Australian employment laws.

The unions have been very vocal in their distrust of the 457 visa system and this has put the Australian Labor Party, part of the coalition government, in a very difficult situation. The increase in the national minimum wage should be felt by all at the lower end of the income spectrum although the government may well have to tighten existing investigative procedures to combat abuses of the system. It has to be said that on the whole the Australian business arena has played by the rules with regards to foreign workers and in many ways it is the actions of a small minority which are causing problems.

Will the national minimum wage increase affect the employment market?

The question of whether the increase in the Australian national minimum wage will impact the employment market is a tricky one. On the surface you would expect an increase in business base costs to be passed on to customers thereby leading to higher prices, slower sales and reduced profitability. However, by increasing the national minimum wage by 2.6% this will put more cash in the pockets of consumers, lead to an increase in tax income for the government and reduce the government’s ever-growing social welfare budget.

On the whole there should be minimal impact on the employment market because of the increase in the national minimum wage. However, we may well see the employment market tighten in the short to medium term as new mining projects come to a close although there is growing demand for construction workers especially in the northern territories.

 Conclusion

Recent moves by the Australian government have been well received by the general public and as we approach the September general election, perhaps this was to be expected? The introduction of a small increase in the national minimum wage will expand the cost base of many businesses but it will also put more money in the pockets of the general public and should lead to higher sales. It will also reduce the social welfare burden of the Australian government thereby reducing government debt and perhaps giving the authorities more freedom to introduce tax breaks in due course.

The Australian employment market is currently going through something of a changeover with focus moving from the buoyant mining industry to the construction sector. This transfer of demand will not be smooth and we could see an increase in unemployment numbers in the short term before demand for construction workers fills the mining employment gap. Whatever happens, it could be a rocky few months for the Australian economy!

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