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Welfare Reform on the Web (November 2008): Minimum Wage - overseas

Closing the gap? The role of wage, welfare and industry policy in promoting social inclusion

P. Smyth

Journal of Industrial Relations, vol. 50, 2008, p. 647-663

In 1907, soon after Federation, a distinctive system of 'social protection by other means' (SPM) is said to have emerged in Australia. It was founded on a system of judicial minimum wage determination which persisted until 2005. In that year the Howard government passed industrial relations reforms known as the Work Choices legislation, which is generally considered to reflect the view that wage minima should be determined by what the market can afford rather than by welfare criteria. The new Labour government which came to power in 2008 will need to revisit the role of the minimum wage in social policy. Many commentators see SPM as a failed model in the context of economic globalisation, and argue that Australia must create a new European style welfare state based on 'flexicurity'. This article argues that the perception of a crisis in SPM is fundamentally mistaken, and that Australian welfare policy has been far less reliant on wage determination than has been supposed.

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