Anthony Albanese welcomes Fair Work Commission’s wages decision

The Prime Minister has welcomed a “common sense” decision on wages that will impact almost three million Aussie workers.

Prime Minister Anthony Albanese has welcomed a decision to give Australia’s lowest paid workers a 5.2 per cent pay rise in an attempt to help millions of people keep up with surging inflation.

The Fair Work Commission handed down its annual wage review on Wednesday, announcing more than 2.7m low-paid and award-reliant workers will benefit.

Minimum wage earners on as little as $20.33 an hour will now receive at minimum $21.38 per hour – a $1.05 increase, equating to about $40 extra a week.

Award-reliant workers will receive a 4.6 per cent increase.

Mr Albanese, who had taken the unusual step of “absolutely” endorsing an increase to the minimum wage during the federal election, so that people could keep up with rising costs caused by inflation, welcomed the announcement.

It follows his government’s submission to the commission, which didn’t list a figure but called for minimum wage workers’ pay not to go backwards.

Unions had called for a 5.5 per cent increase, while some leading employer groups had been pushing for the annual rise to be limited to between 2.5 per cent and 3.2 per cent. Others had proposed no annual rise.

But, considering a fresh warning from the Reserve Bank Governor that inflation could tip seven per cent by the end of the year, real wages are unlikely to keep up with economic pressures for long.

Holding up a $1 coin on Wednesday, Mr Albanese said he “absolutely welcomes” the decision.

“$1.05 an hour, or $40 a week … makes a difference to people who are struggling with the cost of living,” Mr Albanese said.

“We said we didn’t want to go backwards. I welcome that. The truth is many of those people on the minimum wage are the heroes who saw us through the pandemic – these workers deserve more than our thanks.

“They deserve a pay rise, and today they’ve got it.”

Workplace Relations Minister Tony Burke blamed the former Coalition government for not pushing for an increase earlier.

“The era of wages being kept deliberately low by the Liberal and National parties effectively came to an end today,” Mr Burke said.

“People will be seeing in their bank accounts what the change of government means.”

Prime Minister Anthony Albanese had put forward a submission for the minimum wage to rise in line with inflation. Picture: Sam Ruttyn

Fair Work Commission president Iain Ross said that the economic conditions had markedly changed over the last financial year, and the lowest paid Australians needed to be protected.

“Inflation erodes the real value of workers’ wages and reduces their living standards,” he said.

“The low-paid are particularly vulnerable in the context of rising inflation.”

Mr Ross said if the commission had accepted the submissions of some employer bodies who called for no increase at all, the real wage reduction “would be even more severe” given the inflated prices of essentials.

“The (5.2 per cent) level of increase will protect the real value of the wages of the lowest paid workers,” he said.

“The present circumstances warrant an approach which gives a greater level of support to the low-paid while seeking to contain inflationary pressures.”

Modern award minimum wages will also be increased by 4.6 per cent.

While the Australian Council of Trade Unions is “really happy” with the outcome, they’ve voiced their disappointment that some parts of the workforce will miss out until October.

Minimum wage workers in tourism, hospitality and aviation will not receive their increase until October.

“The union movement fought so hard for this increase across pretty heavy cross winds,” ACTU boss Sally McManus said.

“We also had to oppose what the employers were arguing for, which was a very significant real wage cuts, at a time when their profits are up 20 per cent and productivity is up as well as unemployment being low.”

Employers are concerned by the decision to increase minimum wage by 5.2 per cent, with the Australian Chamber of Commerce and Industry warning it will cost the affected businesses $7.9b.

“This is a very significant risk to the economy, it veers very much towards the upper end of the range of possible outcomes,” Andrew McKellar said.

“This adds very significant costs to the Australian economy and to business … It will be a very considerable burden to those businesses that will either have to take it to the bottom line, or pass it on to their customers.

“When inflation is emerging as one of the most urgent challenges facing the Australian economy, and if we are to address that and remain competitive, then clearly this is not a decision that will help.”

Fair Work Commission President Iain Ross said minimum wage workers were ‘vulnerable’ in the tough economic climate caused by rising inflation. Picture Gary Ramage

It follows a warning from the Reserve Bank Governor Philip Lowe on Tuesday night that inflation could hit seven per cent by the year’s end, with multiple interest rate rises likely in that period.

Dr Lowe and the Reserve Bank have come under fire after their prediction last year that interest rates would not rise before 2024 was disregarded.

The cash rate increased by 0.5 per cent last week, the second rise in as many months.

“Sometimes my comments get interpreted as me having made a promise, or a very strong statement, that interest rates would stay where they were to 2024,” Dr Lowe said.

“The economy didn’t evolve as we expected, it’s been much more resilient and inflation’s been higher and we thought we needed to respond to that.”

Meanwhile, public office holders and MPs will receive a 2.75 per cent pay rise from July 1, meaning the salary of a backbencher will rise to $217,060.

MPs had their pay rises frozen during the pandemic, and given inflation is tipped to reach seven per cent by the end of the year, the 2.75 per cent rise is a real pay cut.

It means Mr Albanese will receive an annual wage of $564,364, excluding expenses and allowances, while Opposition Leader Peter Dutton will pocket $401,561 a year.