Establishing an Australian Minimum Wage 1907–1922

Last updated

20 December 2016

[The author, the Hon. Reg Hamilton, Deputy President, Fair Work Commission, wishes to thank Joe Isaac and Keith Hancock for comments on an earlier version of the outline. © Reg Hamilton 2014]

In 1896 Victorian wages boards set the first minimum wage rates in Australia[1], which only applied to the industries of: boots and shoes; articles of men’s and boy’s clothing, shirts, all articles of women’s and girl’s underclothing, bread-making or baking, and later furniture:

  • the minimum wage set by the Bread-Making Board was 1s an hour, effective April 1897;
  • the (Men’s) Clothing Board fixed 7s 6d per day for adult males and 3s 4d for adult females in October 1897;
  • the Boot and Shoe Board set 7s 6d per day for adult males and 3s 4d per day for females in November 1897, later reduced to 6s 8d for male clickers and 6s for all others;
  • the Board for Shifts, Collars, Cuffs etc fixed a rate in January 1898;
  • the Women’s and Girls’ Underclothing Board fixed a rate in June 1899;
  • the Furniture Board fixed a minimum wage of 7s 6d[2]

The Act set an overall minimum wage for any factory or work-room in the colony of Victoria of 2 shillings and sixpence per week[3].  Government inspectors reported that there were real problems in ensuring that the minimum wages were actually paid[4]

As other industrial tribunals were established (South Australia 1900, NSW 1901, Western Australia 1902, Commonwealth 1904, Queensland 1908, Tasmania 1910[5]), they made awards setting minimum wages at various levels, often 6 shillings a day or 36 shillings a week, or lower. 

However, it was the 7 shillings a day set in Ex parte H.V.McKay[6] (the Harvester Decision) that became the basis of the Australian minimum wage system. In Harvester the Commonwealth Court of Conciliation and Arbitration decided that 7 shillings a day or 42 shillings a week for an unskilled labourer was ‘fair and reasonable’ wages, having regard to ‘the normal needs of the average employee, regarded as a human being living in a civilised community’.  It was set having regard to evidence about household budgets, and to enable a man, wife, and three children to live in frugal comfort.  The practice of Melbourne public authorities of paying that as a minimum was also influential.  Higher amounts, such as 10 shillings a day, were applied to more skilled employees.  These amounts only applied to the Harvester factory in Sunshine, outside Melbourne[7]

The Harvester 7 shilling minimum was applied to an award in 1908[8], although there was not one consistent federal ‘minimum wage’ until the 1920s.  Most awards were State awards, and the Harvester rate had little application until the 1920s.  In 1913 the Harvester wage was increased by the amount of inflation found to exist in the first Commonwealth measure of inflation, the ‘A’ series[9]

In 1920 the Royal Commission into the Basic Wage (the Piddington Commission) issued a report[10] into the cost of living.  The report gave an estimate of the income which was sufficient to support a man, wife, and three children under 14 in November 1920 in each capital city in Australia.  It set an amount of 115 shillings for Melbourne, and similar amounts for other capital cities.

In 1921 the Court confirmed that the Harvester 7 shillings, adjusted for inflation, was the appropriate award minimum rate.  It rejected a trade union application for the Court to adopt these higher Royal Commission amounts, on the basis that the economy could not sustain such increases.  It set the new Harvester wage at 85 shillings[11].  The 85 shillings included the ‘Powers 3 shillings’, an amount added by Powers J to maintain the real value of the Harvester minimum wage over the next three months (‘quarter’) because of inflationary price increases which were eroding the real value of the minimum wage.  However, the Powers 3 shillings was retained even when prices were falling and it was removed in 1931, as noted below.    

The Harvester wage became known as ‘the basic wage’.  This was effectively the minimum wage and was also a component of all wages.  Additional amounts known as ‘margins’ were paid to more skilled employees such as tradespersons, known then as tradesmen or journeymen. 

By the 1920s State tribunals had gradually increased award rates to at least those set in Harvester[12].  The coverage of awards had increased and by the 1920s over half of Australian workers were protected by the minimum wage system[13].

There were separate basic wage amounts for each capital city, which varied in minor respects.  In addition, there were separate federal and State awards.  Finally, awards had separate classifications, each with a separate wage rate (or margin until 1967), based on a definition of a job.

Footnotes

[1] The Victorian Factories and Shops Act 1896, No.1445, operative on 28 July 1896

[2] M.B.Hammond, ‘Wages Boards in Australia’, The Quarterly Journal of Economics, Vol.29, No.1  (Nov.1914), pp.122-125.  See also

[3] Ibid, s.16

[4] M.Rankin, Arbitration and conciliation in Australasia, George Allen & Unwin, London, 1916

[5] D.Nemark and W.L.Wascher, Minimum Wages, 2008 MIT, p.11

[6] (1907) 2 CAR 1

[7] The Excise Tariff Act 1906 was found by the High Court to be invalid in R v. Barger (1908) 6 CLR 41.

[8] (1907-08) 2 CAR 55; (1909) 3 CAR 1 at 21

[9] (1913) 7 CAR 58

[10] Australia, Royal Commission on the Basic Wage, Report of the Royal Commission on the Basic Wage together with evidence, 23 November 1920

[11] Gas Employees Case (1922) 16 CAR 4, per Powers J.  See C Forster, ‘Indexation and the Commonwealth basic wage’, Australian Historical Studies, vol.19, pp.111-115

[12] Compendium of Living Wage Declarations and Reports made by the NSW Board of Trade, 1921, pp.10-15, 28-31; Victorian Wages Boards: Their Origins and the Doctrine of the Living Wage, P.G.McCarthy, Journal of Industrial Relations, Volume 10, 1968, p.116 at 130

[13] Waltzing Matilda and the Sunshine Harvester Factory, p.71