In a decision set to impact over 2.7 million workers, the Fair Work Commission declared on Wednesday that it will lift the minimum wage by 5.2 per cent, equating to $40 per week.
“We have concluded that the changes in the economic context weigh in favour of an increase in the national minimum wages,” Fair Work Commission president Iain Ross said.
“The level of minimum wage increases proposed by various employer bodies would result in real wage reductions for award reliant workers, many of whom are low paid.
“If we were to except the submissions of some employer bodies and award no increase at all than the real wage reduction would be even more severe.
“We except the need for moderation in order to contain the inflationary pressure arising from our decision,” Mr Ross continued.
Underlining the vulnerability of the low paid in the context of rising inflation, Mr Ross said “we have decided to award an increase of $40 per week to the national minimum wage, which amounts to an increase of 5.2 per cent”.
“The national minimum wage will be $812.60 per week, or $21.38 per hour. This level of increase will protect the real value of the wages of the lowest paid workers.”
The Australian government’s submission to the FWC asked the commission to ensure that “the real wages of low-paid workers do not go backwards”.
The FWC also proposed to increase modern award minimum wages by 4.6 per cent, subject to a minimum increase of $40 per week.
“In effect, modern award minimum wage rates above $869.60 per week will receive a 4.6 per cent adjustment. Wage rates below that level will be adjusted by $40 per week,” Mr Ross said.
“Given the current strength of the labor market, the adjustments we propose to make will not have a significant adverse effect on the performance and competitiveness of the national economy,” he noted.
While most wage rises are due to kick in on the 1 July, the FWC confirmed rises in aviation, tourism and hospitality sectors would be delayed until October.
In the lead up to the election, Scott Morrison and Anthony Albanese butted heads about a potential increase to the minimum wage.
While at the time Mr Albanese indicated that he would “absolutely” support a rise of at least 5.1 per cent in order to keep up with the current rate of inflation, Mr Morrison called the now PM a “loose cannon on the economy”, accusing him of misunderstanding the consequences of his proposal.
“It’s like throwing fuel on the fire of rising interest rates and rising cost of living,” Mr Morrison said at the time.
Last month, Fitch Ratings warned that Labor’s plan for higher wages would add to price pressure.
Maja Garaca Djurdjevic
Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.
