Previous Year Questions

Question :

Directions : Read the following passage carefully and answer the questions that follow.

In March 2022, the Australian Council of Trade Unions (ACTU) proposed a 5% increase in the national minimum wage, aiming to raise it from $20.33 to $21.35 per hour. This adjustment would result in an annual salary of $42,184 for full-time workers. The ACTU's initiative sought to support approximately 2.67 million employees dependent on the annual wage review for salary adjustments. ACTU Secretary Sally McManus emphasized that this raise was essential for low-paid workers to "keep their heads above water" amid escalating inflation and living expenses. ​ The call for a wage increase was set against a backdrop of significant economic challenges. In the previous year, inflation had risen by 3.8%, while wages had only seen a 1.7% increase, leading to a decline in real wages. This trend persisted into 2022, with inflation outpacing wage growth by 1.25 percentage points. The Morrison government faced criticism for its budgetary measures, which were perceived as offering only temporary relief without addressing the structural issues of high inflation and stagnant wage growth. ​

The proposal ____X____ varied responses from different sectors. Employer groups were anticipated to suggest more modest wage increases, ranging between 2% to 3%. Historically, the Coalition government had adopted a neutral stance in minimum wage deliberations, providing technical insights into the economic landscape without advocating for specific wage adjustments. McManus criticized this approach, suggesting that the government had been passive regarding wage growth initiatives. ​The political arena was also engaged in the discourse on wage adjustments. The shadow treasurer at the time, Jim Chalmers, highlighted the government's track record of overpromising and underdelivering on wage forecasts, noting that 52 of the last 55 wage projections had been inaccurate. In response, Prime Minister Scott Morrison asserted that real wages were projected to increase, attributing this to the government's success in reducing unemployment to below 4%. Treasurer Josh Frydenberg projected that the wage price index would reach 3.25% in the following year, marking the most substantial growth in nearly a decade. ​

Following these discussions, the Fair Work Commission announced in June 2022 a 5.2% increase in the national minimum wage, translating to an additional $40 per week for minimum wage earners. This decision elevated the hourly pay rate from $20.33 to $21.38, impacting at least 2.7 million Australians. The Commission cited a sharp increase in the cost of living as a significant factor influencing their decision. Reserve Bank of Australia Governor Michele Bullock supported wage increases, particularly for underpaid sectors like aged care, suggesting that such raises were justified and would have minimal impact on inflation. ​The ACTU's 2022 proposal for a 5% increase in Australia's minimum wage highlighted the pressing challenges faced by low-income workers amid rising inflation and living costs. While the Fair Work Commission's subsequent decision aligned closely with the ACTU's recommendations, the broader conversation about balancing wage growth with economic stability remains a pivotal issue in Australia's labor market.​

Which of the following statements best captures the economic context surrounding the ACTU's 2022 wage proposal?