The Annual Wage Review 2009-10 of the Minimum Wage Panel of Fair Work Australia (Invited Paper)

Over a hundred years ago the deplorable employment standards of the 'sweating' industries moved reformers in both Australia and Britain to consider statutory intervention. The labour market in both countries allowed some employers to get away with paying wages that were inadequate to sustain what was publicly considered to be an adequate standard of living. The Victorian State wages boards were later copied by the British. But whereas the Australians went on to set up a comprehensive system of statutory minimum wages established by compulsory arbitration, the British went no further than establishing wages boards for a few specific sectors. The hope was that, in due course, they would be replaced by collectively bargained agreements. This did not happen. The British wages councils, as they came to be called, limped on through the twentieth century, increasingly out of touch with emerging sectors of low pay, out of touch with surrounding earnings, and poorly enforced. All were abolished in 1993, except the one for agricultural workers, whose abolition by the new Coalition government has just been announced. Long after most other countries, in 1999, the British introduced a comprehensive statutory National Minimum Wage. The pressure for this came from the rapidly worsening relative position of the low paid. The abolition of the wages councils had been a contributory factor. So also was rising net immigration. But, much more important, was the decline in trade union membership and the coverage of collective agreements which, in turn, were a consequence of tightening competitive pressures at home and internationally. It was becoming evident that there was little to protect the low paid from an increasingly inhospitable labour market, and that the cost to the Exchequer of welfare payments to support those in very low-paid work was becoming unaffordable. The introduction of the National Minimum Wage was, by most standards, deemed a success, and quickly accepted by all British political parties.