Fair Pay Commissioner Ian Harper has warned low-paid workers that the protection of jobs will be the guiding force in his final deliberations on the minimum wage.

Despite rising inflation, the man charged with setting the minimum wage has confessed he is deeply concerned that any movement that is too aggressive could exacerbate unemployment.

And he has asked business, unions and the Rudd Government to provide him with the most up-to-date data on employment forecasts to assist the commission’s deliberations amid volatile economic conditions.

In an interview with The Australian yesterday, Professor Harper predicted the economic slowdown would make his 2009 decision the most difficult by far.

Since 2006, the economist has helped deliver a total of $60-a-week pay rises to the nation’s lowest-paid workers.

But he warned the buoyant economic conditions that allowed those rises were over.

“Inflation will probably still be 3 to 3.5 per cent this year,’’ Professor Harper said. “So you’ve got the worst of both worlds: you’ve got inflation still rising-which is undermining people’s purchasing power in the usual way-and you’ve got unemployment rising because the economy is slowing.

“We can get caught either way. If we put the minimum wage up too high, that can induce employers to sack people. If we don’t put the minimum wage up fast enough, people leave the labour force and go on to the unemployment rolls.’’

Professor Harper’s comments come before the release this week of December’s unemployment figures, which are expected to show employment growth has stalled. The data for November revealed the number of unemployed people had climbed to its highest level since February 2007.

The workforce fell by 15,600 people in that month. The jobless rate inched from 4.3 to 4.4 per cent, with the number of jobless climbing to just under 500,000.

Professor Harper said the volatile nature of the economy had made historical data less helpful than usual and that he had commissioned new economic modelling to consider the impact of movements in the minimum wage in the retail, hospitality and community services sectors.

Last July, the Australian Fair Pay Commission surprised business by granting a $21.66-a-week rise in the minimum wage for 1.3million low-paid workers, increasing the base rate to $543.78 a week. Business had called for a $13.30 rise and the ACTU had wanted $26 a week.

A Howard government appointee, Professor Harper was branded a “lackey of business’’ by unions, but silenced his critics with increases of $26 in 2006.

ACTU secretary Jeff Lawrence said yesterday unions did not accept a link between employment and movements in the minimum wage.

“We’ve got a meeting in early February to determine our position,’’ Mr Lawrence said.

“But we’re certainly not going to be proposing that wages go backwards. We certainly do think there’s a lot of room for collective bargaining to respond to the challenges in particular industries. But we don’t think the lowest-paid workers should bear the brunt. I don’t accept there is any trade-off between employment and the level of minimum wages.’’

Professor Harper is seeking submissions to his minimum pay review by the end of March, but key stakeholders will be allowed extra time to put in supplementary material to allow the commission to consider the most up-to-date data.

The decision will be announced mid-year. Professor Harper said this would mean he would reach a decision within a month of the May budget.

“The Government could complicate things for us by making the safety net much more generous,’’ he said. “If they increased unemployment benefits or made it easier to get benefits, then we would have to be cautious.’’

Professor Harper said a decision to keep the minimum wage at its current level could conceivably make it more attractive for “people to say, ‘forget about it’ and just go on unemployment benefits’’.

Professor Harper is also waging a battle over paid maternity leave with the Productivity Commission and the Government.

While he said the Fair Pay Commission did not have a view on maternity pay, he was concerned that by linking the scheme to the minimum wage it would conflate and confuse the constituents he had to consider when setting the minimum wage.

If high-income earners were paid the maternity leave minimum wage for a brief period, he would have to consider the employment impact on any movement in minimum pay on these workers.

“It doubles the constituency of people with a vested interest in the minimum wage from 150,000 to 300,000.’’.

Source: CareerOne