Win for Albanese and for those doing it tough

After years of the Coalition sitting on its hands, Labor’s direct bid for the lowest-paid to get an increase in line with inflation has been endorsed.

Fair Work Commission president Iain Ross. Picture Gary Ramage

The Fair Work Commission’s minimum wage decision represents a political victory for the Albanese government, delivering on Labor’s pledge to help the nation’s low-paid combat the cost-of-living crisis.

After years of the former Coalition government sitting on its hands during the annual wage review and providing little beyond a broad economic overview to the commission, Labor’s submission that the lowest paid should get an increase in line with inflation has been endorsed.

Employer groups rarely meet a wage rise they like and the headline 5.2 per cent increase in the minimum wage reignited the usual “sky falling down” warnings of inflation spirals, job losses and business closures.

But given the inflation rate is soaring after almost a decade of stagnating wages, these are not usual times.

In previous years, the commission has awarded smaller percentage rises, but thanks to lower inflation workers received a higher real wage increase than many will in 2022.

Under this decision, an estimated 184,000 workers on the minimum wage of $20.33 an hour will get a 5.2 per cent rise from July 1 when the inflation rate for the March quarter was 5.1 per cent, and is forecast to rise further.

Unlike recent years when the commission awarded a sole percentage increase that flowed through to an additional 2.5 million award-reliant workers, workers on higher award rates will this year receive a lower 4.6 per cent increase.

University of Adelaide law professor Andrew Stewart estimates most award-reliant lower level workers will get rises of about 4.9 per cent or 5 per cent.

It sounds high but still represents a real wage cut. Workers in aviation, tourism and hospitality will also have to wait until October for any increase, while the 4.6 per cent rise translates into a $20-a-week increase for first-year electrical apprentices.

The commission faced a difficult balancing act and, on balance, has made a decent fist of it. The decision underlines the need for Labor to work with unions and business and fix the failing enterprise bargaining system.