Raising minimum wage an "unnecessary risk"

WORKERS on the minimum wage should be allowed a pay rise of only 1.6% this year, or $10 a week, a business lobby group has urged the Fair Work Commission.

The Australian Industry Group, which represents mainly manufacturing firms, made the call to the commission in a submission to this year's minimum wage review.

It argued that raising the lowest-paid workers' wage by any more than 1.6% was an "unnecessary risk" that could "further damage Australian competitiveness".

The commission is currently completing its annual review of minimum wages, pitting employers against unions and social services groups in trying to find the balance for Australia's lowest paid workers.

In its submission to the review, the AIG argued raising minimum wages by "too much" would dampen the prospects of jobless Australians, arguing

The group wrote the Australian minimum wage was already among the highest in the developed world.

"In setting minimum wages this year, Ai Group proposes a 1.6 per cent wage increase. This equates to a $10.003 per week increase in the National Minimum Wage and $11.604 per week at the base trade level," the submission reads.

The employer lobby further argued union calls for a $27 a week minimum wage rise was "unrealistic, unaffordable and unsustainable".

"If such a claim was granted it would cause significant economic damage and undoubtedly lead to greater unemployment," the submission reads.

The business group's arguments were echoed in the Federal Government's submission, which urged the commission to "take into account the substantial support already offered to the low paid by government".

Backing its argument, the government also wrote that even if minimum wages were lifted, not all of the wage increase would "flow through to disposable household income", instead likely to be spent on essentials like housing.

Final consultations on the minimum wage review are expected in May, before the commission makes a final decision later this year.

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