Fair Work Commission gives lowest paid workers a $18.70 a week pay rise

AUSTRALIA’S 1.5 million lowest paid workers will get an $18.70 a week pay rise after a decision by Fair Work Australia.

Caitlyn Faircloth, a worker with Molly Moon's Homemade Ice Cream, hands out free ice cream next to a tip jar, Monday, June 2, 2014, at a rally celebrating the passage of a $15 minimum wage measure outside Seattle City Hall in Seattle. The Seattle City Council passed a $15 minimum wage measure, Monday, but not until after debate over how long businesses will have to phase in the measure, and how tips, benefits, and other forms of compensation will be considered. (AP Photo/Ted S. Warren)

AUSTRALIA’S 1.5 million lowest paid workers will get an $18.70 a week pay rise.

The increase falls below the $27 per week rise the ACTU argues is necessary to avoid creating an underclass of working poor, but will disappoint business groups who argue they can only afford an extra $8.50.

Workers on the minimum wage will now earn $16.87 per hour, an increase of 50 cents on the previous hourly rate.

Fair Work Commission president Justice Iain Ross said the wage rise was appropriate given pay inequality in Australia was increasing.

“While real earnings have generally increased over the past decade, earnings inequality is increasing,” he said on Wednesday.

“Over the past five years, the rate of growth in average earnings and bargained rates of pay have outstripped the growth in minimum wages for award-reliant workers.

“This has reduced the relative living standards of award-reliant workers.”

The rise means the national minimum wage will now be $640.90 a week.

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Justice Ross said Australia’s economic outlook remained sound, with employment growth expected to be stronger in 2014/15 and inflation contained.

Working against those factors are a continuing high youth unemployment rate and a falling full-time employment to population ratio.

He said the superannuation guarantee rate increase set to take effect from July was a moderating factor, but he said the Fair Work Commission did not take into account the proposed repeal of the carbon tax.

“We have decided that the range of considerations we are required to take into account favours the award of an increase which will result in a modest improvement in the real value of modern award minimum wages,” Justice Ross said.

The Fair Work Commission announced the result of its 2013-14 annual wage review decision at 2pm.

The national minimum wage was, before this afternoon’s decision, $622 a week.

The federal government had urged the commission to consider that Australians would be netting an extra $550 a year once the carbon tax was abolished.