2.6 million minimum and award wage earners get July 1 pay boost

Australia’s workplace umpire has revealed its reasons for increasing the minimum wage for 2.6m workers by another 3.75 per cent.

More than 2.6m Aussie workers will receive at least an additional $33.10 a week from July 1, the workplace umpire has ruled.

The order, handed down by the Fair Work Commission on Monday, will increase award and minimum wages by 3.75 per cent, with the national minimum wage set to increase by 87c to $24.10 per hour, or $915.91 a week.

Commission president Justice Adam Hatcher said the Commission bench had chosen not to deliver an increase that significantly outstripped inflation – measured at 3.6 per cent in the year to March — when productivity was weak and additional cost of living relief was in the pipeline.

“It is not appropriate at this time to increase award wages by any amount significantly above the inflation rate,” Justice Hatcher said.

“This is principally because labour productivity is no higher than it was four years ago and productivity growth has only recently returned to positive territory.”

“We have also taken into account that modern award-reliant employees will shortly receive the benefit of the stage 3 tax cuts and the budget cost-of-living measures, which are projected to increase real household disposable incomes over the next 12 months.”

The share of Australian workers directly and indirectly affected by the decision equates to roughly one in four workers.

Across the economy, 20.7 per cent of workers have their pay set under 121 modern award rates, while just 0.2 per cent or 32,100 of Australian employees are paid the minimum wage.

A further 4 per cent of workers on enterprise and individual agreements have their pay tied to the Commission’s annual determination.

Commission to examine female dominated industries

After gender equality was made an objective of the Fair Work Act, the Commission also announced it would further examine pay in female dominated industries, in a rejection of the Australian Council of Trade Unions' call for an additional 4 per cent pay hike for those workers, on top of its 5 per cent claim.

Workers in the childhood education, disability, social and community service sectors, alongside dental assistants, medical technicians, psychologists, and other health professionals and pharmacists would be the subject to the proceedings, Justice Hatcher said, which would be completed before next year’s decision.

While ACTU secretary Sally McManus welcome the pay increase, ACCI boss Andrew McKellar said it would exacerbate cost pressures faced by business. Picture: NCA NewsWire

Hailing the result as a “win for workers”, ACTU secretary Sally McManus said the increase, when coupled with the stage three tax cuts, would leave employees thousands of dollars better off.

“This decision allows people to keep up with inflation and have a small real wage increase,” she said.

“If employers got their way, Australian workers would’ve seen a significant real wage cut while facing cost-of-living pressures.”

But Australian Chamber of Commerce and Industry chief Andrew McKellar, who had advocated for a 2 per cent increase, said the Commission had taken a “leap of faith” in awarding an above-inflation increase, which would exacerbate cost pressures faced by business.

“This tests the limits of what’s acceptable from a business point of view — it will do little to take further inflationary pressure out of the economy,” Mr McKellar said.

With the government submitting that the lowest paid workers should not go backwards, in effect advocating for an increase in line with inflation, Employment Minister Tony Burke also welcomed the increase.

“What we have here are people who have less room to move with cost of living and we’re making sure that their wages keep up,” Mr Burke told reporters in Canberra.

Ahead of the decision, the Albanese government submitted that Australia’s lowest paid workers should be in-line for an inflation-matching increase. Picture: NewsWire / Martin Ollman

“It’s what the government asked for in the submission. It’s why we’ve also got the cost of living relief in the budget. It’s exactly what the Fair Work Commission has independently decided today.”

Ahead of the decision, economists had warned that a significant increase could complicate the RBA’s inflation fighting efforts and keep interest rates higher for longer.

But RBC Capital Markets chief economist Su-Lin Ong said the wage rise would bring comfort to the central bank.

“Amid ongoing cost of living pressures and numerous anecdotes of these pressures, there was some risk of a larger increase,” she said.

“The FWC has been both fair and prudent.”

Westpac senior economist Justin Smirk agreed the Commission had struck the right balance between still weak labour productivity and providing additional cost of living relief.

“Not only did the FWC note that they considered the rising cost of living for the workers affected by the decision, but they also took into account the rejigged stage three tax cut and broader cost of living relief those workers will be receiving from July 1,” he said.

Originally published as 2.6 million minimum and award wage earners get July 1 pay boost