Australia’s lowest paid workers would receive pay rises less than the rate of inflation this year under a controversial proposal from Business SA to the Fair Work Commission.

Business SA recommends that the minimum wage be increased by only $5.70 a week, or 0.9 per cent, in its submission to the commission which is currently conducting the 2015 annual wage review.

South Australia’s peak business lobby justifies the small wage increase on the basis that previous wage determinations have outstripped inflation and, given South Australia’s current flat economic conditions and the impending departure of automotive manufacturing, it is now time to “rebalance” the earlier increases.

The Business SA submission notes that the commission awarded increases of 2.6 per cent and 3 per cent in 2013 and 2014 respectively, taking the minimum wage to $640.90 a week. Given the annual Consumer Price Index (CPI) increases in that period, Business SA maintains the higher wage increases represented a combined 1.1 per cent additional payment above the CPI.

With the Reserve Bank of Australia forecasting CPI increases of 2-3 per cent in 2015, Business SA recommends the commission should “increase the national minimum wage by the expected CPI increase of 2 per cent, adjusting for the 2013 and 2014 above CPI increases (1.1 per cent in total) which resulted from the Minimum Wage Review in those years”.

“This approach will result in a national minimum wage increase of 0.9 per cent or $5.70 per week in 2015,” the Business SA submission says.

Chief executive Nigel McBride says the current state of South Australia’s economy and the sobering near-term outlook should define the parameters against which wages rises are determined.

“Small and medium enterprises, which provide the vast bulk of jobs in South Australia, have been paying over the odds in terms of the Fair Work Commission’s determinations in the past two years, and they will continue to do so in the years ahead,” McBride said.

“So we believe it is not unreasonable that the minimum wage increase is now rebalanced to take into account the higher-than-inflation rises that were awarded in 2013 and 2014,” he said.

“Wages have to reflect the economic realities of business and high wage increases are worthless if you don’t have a job.”

Business SA also supports the concept that wages should not necessarily be uniform across the country.

Its submission to the commission says: “While acknowledging that the minimum wage provides a safety net for employees, the Fair Work Commission also needs to account for the fact that its decision has varying impacts across industries and regions”.

“Consequently, the Fair Work Commission should consider regional variations in accordance with the recommendation put forward by the recent National Commission of Audit (conducted for the Federal Government).”

On the current economic climate, Business SA notes: “Since the Global Financial Crisis, as evidenced by the Fair Work Commission’s own analysis, company gross operating profits have been predominantly negative”.

“This situation is only exacerbated in a State like South Australia where the economy is growing significantly below the national average.

“Businesses do not grow and create jobs in a macro environment of high costs and low or even negative profitability and the Fair Work Commission must have regard to the underlying drivers of the private sector in setting a minimum wage which not only supports employees, but supports the businesses which ultimately create their jobs.”