Millions of workers score pay rise as Fair Work Commission announces minimum wage ruling

Millions of Aussie workers are finally about to pocket a big pay rise — but one group has been “screwed” in the move, unions say.

Millions of low-paid workers are finally set to pocket a pay rise this year, but others feel like they’ve been “screwed”.

Just after 10am (AEST) on Wednesday morning, the Fair Work Commission announced a push by the unions and the new Albanese government to boost minimum wages had been successful, with a 5.2 per cent boost approved.

That brings Australia’s minimum wage up to $21.38 per hour or $812.60 per week, representing an increase of $40 per week.

Modern award minimum rates will also go up 4.6 per cent “subject to a minimum increase of $40 per week”, and both increases will come into effect from July 1 for most workers.

But the Electrical Trades Union of Australia says apprentices are being shafted.

In a statement on Wednesday, ETU national secretary Michael Wright said the decision fails already-struggling apprentices who are being delivered “a real wage cut that could slow Australia’s clean energy transition”.

The ETU says apprentices will receive barely half of the $40 boost per week, “instead receiving just $20.69 per week extra or 4.6 per cent”.

“It just got harder for an apprentice electrician to complete their training,” he said.

Earlier, Fair Work Commission president Ian Ross said the changes reflect a “sharp increase in the cost of living”.

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Australian Council of Trade Unions secretary Sally McManus had pushed heavily for the rise. Picture: Matthew Forrest

“At the aggregate level, labour market performance has been particularly strong. The unemployment rate has fallen to 3.9 per cent., compared to 5.5 per cent in April 2021, at the time of the last review.

“The improvement in the labour market is forecast to continue in the period ahead. There has also been a sharp rise in the cost of living since last year’s review.

“At the time of last year’s decision, the Consumer Price Index and the underlying measure of inflation both stood at 1.1 per cent. The comparable figures now stand at 5.1 per cent for the CPI and 3.7 per cent for the trimmed mean, or the underlying inflation rate. There is also a marked difference in the inflation forecasts.”

Twist in wage decision

While today’s announcement is welcome news for many, there are a few catches.

Firstly, the increase in the minimum wage will be delayed until October 1 for certain industries, including aviation, tourism and hospitality, meaning workers in these sectors will face a three month wait.

And secondly, the 5.2 per cent jump for those on minimum wage actually only benefits the minority of the millions of Australians on low wages, while the majority will get the more modest 4.6 per cent boost to modern award minimum rates.

According to the Fair Work Commission, 2,659,400 (23 per cent) of employees had their pay set by awards, while 805,200 award reliant employees were “low paid”.

And up to 184,000 employees in total are paid the national minimum wage, including 88,900 award-reliant employees, 79,200 employees on individual agreements and 15,900 employees covered by enterprise agreements.

Finally, according to Australian Chamber of Commerce and Industry CEO Andrew McKellar, the increase could ultimately lead to price rises for customers.

“By our calculation, this will add $7.9 billion in costs to the affected businesses over the year ahead, so that will be a very considerable burden that those businesses will either have to take to the bottom line or pass onto their customers,” he said in response to the Fair Work Commission’s announcement.

“It comes at a time when inflation is emerging as one of the most urgent challenges facing the Australian economy and if we are to address that, if we are to remain competitive, then, clearly, this is not a decision that will help in those circumstances.”

Australian Industry Group chief executive Innes Willox agreed, claiming the move “will add fuel to the inflation fire”.

“There is a major risk that the 5.2 per cent increase that has been awarded to the national minimum wage, with increases of between 4.6 per cent and 5.2 per cent to award rates, will fuel inflation and lead to even higher interest rates; even more hardship for people with mortgages, personal loans or credit card debts; and add substantially to the risk of unemployment and underemployment – particularly for unskilled employees,” he said.

“The cost increase will be difficult to absorb for businesses that are already struggling to cope with big increases in material and energy costs, interest rate rises, supply chain disruptions and labour shortages.”

‘Cost of living crisis’

The Australian Council of Trade Unions (ACTU) had called for a 5.5 per cent pay rise for more than 2.3 million Australians on minimum wages, while the Labor government had supported a slightly more modest increase of 5.1 per cent in line with inflation to make sure “the real wages of Australia’s low-paid workers do not go backwards”.

The changes will impact the more than 2.7 million Australians on the national minimum or award minimum wages.

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A 5.1 per cent pay rise would equate to an extra $1 per hour, and would lift the hourly minimum wage to $21.36.

In a statement earlier this month, Prime Minister Anthony Albanese said increasing the minimum wage would also help close the gender pay gap, an issue which featured heavily during the election campaign.

“Many low-paid workers are young, female, in casual employment, and are far more likely to find themselves experiencing financial hardship,” he said.

“These low-paid workers were also on the front line delivering essential services during the Covid-19 pandemic, including in the retail, hospitality, aged care, cleaning, and childcare sectors.”

Meanwhile, employer groups have campaigned for the rise to be far lower, at just 2.5 per cent to 3.2 per cent, and for a delay in pay rises for those in sectors affected by Covid, such as tourism and hospitality.

The Albanese government has backed a pay rise. Picture: NewsWire/Monique Harmer

But ACTU secretary Sally McManus said working people needed a significant pay rise now.

“Under the last government we had almost a decade of record-low wage growth capped off by real wage cuts across the economy. The Annual Wage Review can end those cuts for a quarter of working people,” she said.

“It’s is morally indefensible for employers to argue for pay freezes when profits are up 20 per cent and on every measure businesses have recovered well from the pandemic. The biggest risk to business is actually consumer spending which ironically they are seeking to damage through their proposed wage cuts.

“Arguing for a pay freezes and cuts for working people when all the economic indicators support a significant pay increase makes it crystal clear that some of these employer groups will never support pay rises for workers.”

Ms McManus said that the country was grappling with a cost of living crisis, with “productivity high and profits at record levels, low unemployment and the lowest labour share of GDP on record”.

“Anyone not currently advocating for wage growth is ignoring the problem,” she said.

“Working people cannot be left behind in the recovery from the pandemic.”

Originally published as Millions of workers score pay rise as Fair Work Commission announces minimum wage ruling