Call for minimum wage to be frozen

A major business group argues the minimum wage must remain frozen until mid-next year if people are to get back into work as the pandemic eases.

The nation has posted the worst employment figures on record as a result of the COVID-19 crisis, with 600,000 people losing their jobs and the unemployment rate spiking to a five-year high of 6.2 per cent.

"We should take stock of yesterday's confronting unemployment and underemployment figures," Australian Chamber of Commerce and Industry CEO James Pearson said.

"This is not time to be talking about wage increases when hundreds of thousands of Australians have lost their jobs or can't get enough hours of work."

The Treasury still expects the unemployment rate to spike to 10 per cent in the June quarter.

In its submission to the Fair Work Commission's annual review of the minimum wage, ACCI argues 2020 is one of those "extraordinary years" in which minimum wages should not be increased.

"We cannot afford to place even more jobs at risk by making the cost of employment higher," Mr Pearson said.

"In particular we cannot afford a four per cent increase, which would be the highest increase in a decade, as has been proposed by the ACTU."

ACCI says Australia already has one of the highest minimum wages in the world, and which has consistently risen by more than prices for a decade, particularly in the past three years.

The minimum wage is $740.80 per week.

Even with no increase in 2020, ACCI says employees on minimum wages will retain increased purchasing power, and all indications are that inflation will remain low.

Industrial Relations Minister Christian Porter made his views clear earlier this week.

"To propose a very substantial increase to the world's highest minimum wage, at precisely the time that businesses are at the weakest point, perhaps ever in Australia's history, I think is just a wrongheaded submission," he said.

The annual minimum wage debate comes at a time of sluggish wage growth more generally.

Figures this week showed wage growth was already easing heading into the pandemic, and economists expect it will weaken even further in coming months because of the collapse in the labour market.

Wages grew by 2.1 per cent in the year to the March quarter, down from 2.2 per cent as of December.

This was under the rate of inflation at 2.2 per cent and well below the long-run average of three per cent.

Federal government figures show new enterprise bargaining agreements concluded in the December quarter were struck at an average annualised growth rate of 2.7 per cent for a second quarter in a row.

Agreements in the private sector also remained at a rate of 2.7 per cent, while those in the public sector eased to 2.5 per cent from 2.6 per cent.