Dec 2016

Will Australia’s minimum wage force more work offshore?

By: Odyssey General
Tags: Australian bookkeeping, Australian compliance, Automation, offshore, Wages

Quick Question: In what country is it permissible under law to pay a minimum wage of US$2.13 per hour plus tips, or US$4.25 an hour for the first 90 calendar days of employment if under 20?

Ok so yes, we agree the US$7.25 minimum wage in the US is probably a more reflective figure. But it’s still remarkably lower than the Australian minimum wage of Aus$17.70 per hour, excluding 25% casual loading when appropriate bringing the ad-hoc rate up to Aus $22.12 for casual workers in Australia. That still works out to be US$16.37, which is 2.25 times more than a US worker.

It’s probably not surprising that some Australian accountants have considered outsourcing to the US!

So how does Australia compare to the rest of the world. There was an interesting comparison prepared earlier this year, where Australia’s wage was compared to other countries. Unfortunately Australia tops the list. It’s interesting that Australia at the top is $17.70 per hour, but by the time you get to the bottom of the list the countries listed range from $3.00 to $17.70 per day (not per hour).

And it does seem from recent news that there is plenty of focus on people who aren’t paying the correct wages in Australia. Students, widespread exploitation and underpayment of 417 visa holders, unpaid internships (including accountants) , exploitation of backpackers, and of course the recent focus on training rorts including Australian accounting training.

As this article notes, Low-skilled labour thus tends to be relatively expensive in Australia, and increasingly many of the jobs for which they are most suited are disappearing, moved offshore or replaced by technology.

And in an increasingly vigilant market, with an increasing array of online tools to manage their rights, with an increasingly litigious society, it might be one increase too many.

It’s probably no surprise that there is continual focus by Australian businesses and Australian accounting firms to look overseas for offshore solutions to the labour costs in Australia.

One thing that certainly isn’t a question: there is no future in Australia for lower skilled data entry and bookkeeping work.

The real question is how long the search overseas will continue before automation catches up and removes the need for offshore lower skilled data entry and bookkeeping work…