Working it out: Cost of living versus capacity to pay

Updated time

Last updated

05 September 2016

Industrial tribunals had to resolve complex questions about the economic and social effects of minimum wages they proposed to set. During the 1900s a debate took place between those seeking protection for workers and the needs of their family and those seeking to protect industry, a debate that continues today. 

The level of the minimum wage reflected that debate, with a lower level of minimum wage for unskilled labourers initially set by tribunals because of a different method of assessment of needs (for example, 6 shillings a day in NSW), and a relatively higher level of minimum wage set in Harvester (7 shillings a day), which was later on gradually adopted across Australia.

However, concerns about the capacity of industry to pay led to the rejection of attempts to raise the level of the minimum wage for unskilled labourers again to the level of ‘needs’ estimated by the Royal Commission into the Basic Wage of 1920. 

Capacity to pay was again given priority when award wages were cut by 10 per cent as a result of the Great Depression of 1931, when industry capacity to pay was substantially reduced. 

1912: Prices, Price Indexes and Cost of Living