A 2018 study of the increases found they had little effect on overall unemployment and that employers were absorbing the costs through higher prices, lower profits and changes to workforce structures.
On the other hand, the country has also seen a rise in non-compliance, with one in four workers covered by the living wage underpaid.
But is a living wage really suitable for Australia?
Unions tried and failed to get the Fair Work Commission to phase in a living wage tied to 60 per cent of median earnings in 2017.
The commission made the point that Britain had introduced its living wage from a much lower base than Australia.
“While the annual increases in the UK have outstripped those granted in Australia it is notable that it was pitched initially at a level much lower than then applying in Australia (on a purchasing power parity basis the UK minimum in 1999 was $US4.96 compared with $US7.82 in Australia) and has remained lower to date,” the commission said.
“Even taking the latest increase in the national living wage for those over 25 years, the UK minimum of £7.50 (on a PPP basis $US10.44) remains below Australia’s minimum adult rate ($US12.23).”
Instituting a living wage in Australia would also come after two years of record increases in the minimum wage at 3.3 per cent and 3.5 per cent.
The increases have seen the minimum wage rise to about 55 per cent of median earnings, well above the average in comparable OECD countries.
‘Outdated’
The idea of a living wage has also become a bit outdated.
It was originally based on the famous 1907 Harvester judgement, which found that a worker should be paid enough to support a family.
From then, the minimum wage reflected the costs of living for a single-earner family household.
But a lot has changed in the last 100 years.
Employment is more diverse, more women are participating in the labour force and many households see both partners working.
The Fair Work Commission no longer models its minimum wage around a single earner with children.
Indeed, unions’ bid for a living wage is not even an “absolute” living wage directly attributable to costs of living.
Instead, it is a “relative” living wage, one defined in relation to others earnings and in response to inequality.
This approach may be because unions can no longer get the gains they want from an “absolute” approach, given inflation has been so low for the past few years.
In an analysis earlier this year, University of Melbourne economist Jeff Borland found that 80 per cent of the slowdown in male full-time average earnings and all the slowdown in the wage price index can be explained by the slower growth in nominal prices and labour productivity.
Tax and transfers the better way
Professor Borland says if you want to lift living standards, tax credits or income supplements are a much more targeted way to do so than raising minimum wages, which may deter employment.
“I tend to favour addressing issues of people having inadequate income to achieve a decent standard of living through the welfare system,” he says.
“Fifty years ago, when labour market was made up of married males working, there was a stronger correspondence between what you earned in the labour market and the income available.
“These days, with workforce participation so diverse – often including multiple people from within a household – it’s become a lot more difficult to achieve the objective of ensuring a household has a sufficient income.”
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