Years of moderate increases to the minimum wage mean low incomes earners are all but shut out of the housing market.
The ACTU lodged a submission to the FWC on March 27 calling for a wage increase for Australia's lowest paid including cleaners, retail and hospitality staff, child care workers, farm labourers, and some factory workers.
The annual income of a full-time minimum wage worker is $33 418 while the average price of a dwelling in the capital cities is $677 550. This means paying 80 per cent of the mortgage on an average-priced house would take up a staggering 81 per cent of a minimum wage worker's gross income.
However, a minimum wage worker could only borrow around $150 000 according to the Commonwealth Bank which is a quarter of the average dwelling price.
Over the past ten years the Australian housing market had ballooned, with average house prices increasing by 67.5 per cent between 2004 and 2014 but minimum wages only rose by 37.1 – or 4.8 per cent in inflation-adjusted terms.
Buying a house and escaping the rental trap is the biggest affordability dilemma for most workers but for minimum wage earners it's a pipedream.
Key facts
- 1.86 million Australians (18.8% of the workforce) are paid the national minimum wage or an award minimum wage
- The ACTU is seeking a $27 per week increase to the minimum wage from $640.90 per week to $667.90 (from $16.87 to $17.58 per hour)
- The $27 per week increase also applies to award minimum wages up to the C10 tradesperson rate and a 3.6% increase for award rates above the C10 rate (these are classifications for workers on award minimum wages)
- The Abbott Government's decision to delay the 0.5 super increase until 2021 means a 20-year-old minimum wage worker will be $18,401 worse off in retirement
Quotes attributable to ACTU Secretary Dave Oliver
"The raising of the minimum wage is about people's lives. This year we call on the Fair Work Commission to carefully consider the impact on low income earners when they are all but exiled from the housing market," Mr Oliver said.
"The only way they can afford to buy a home is to work multiple jobs but if all these jobs are low income then it still remains extremely tough.
"Many minimum wage earners have been working all their lives caring for older Australians in aged or community care, they work farms, they clean schools and hospitals or look after young children in childcare.
"These are tough and important jobs and yet saving up for something as integral as a home is nearly impossible even after years of work."