The Fair Work Commission has announced it will increase minimum wages by 3.75%.
Both the ‘national minimum wage’, which affects 1% of the workforce, and minimum award wages, which cover 2.6 million Australians, are covered by this increase.
It comes after unions and the Government called on Fair Work to lift wages to meet cost-of-living pressures.
Last year, minimum award wages increased by 5.75%, and the national minimum wage increased by 8.65%, the largest in at least a decade.
For Context
The Fair Work Commission is an independent Government tribunal. Once a year, it releases a decision on changes to two types of wages.
The national minimum wage sets out the minimum rate of pay for employees across all sectors. About 1% of all workers receive this exact wage.
Award minimum wages are the base rates in pay agreements that apply to workers in specific sectors.
Fair Work’ Decision
During its annual wage review, Fair Work examines submissions from stakeholders including the Government, unions, and business groups.
These stakeholders argue their case for how they think wages should or shouldn’t change that year.
Fair Work considers this information as part of the review process. However, its decision is made on a range of factors, including inflation (rising prices) and broader economic impacts.
The Wage Increase
Fair Work announced on Monday that minimum wage rates will increase by 3.75% from 1 July.
The Commission said its decision considered primarily cost of living pressures on “the needs of the low paid” and “the need to achieve gender equality.”
The increase will impact nearly 22% of the Australian workforce, made up mostly of women and casual workers.
Government Response
In its recent submission to the Fair Work Commission, the Government argued inflation disproportionately disadvantages low-paid workers.
It welcomed today’s decision, calling it a “win for workers” and “a win for women”.
“We want to see strong and sustainable wages growth because we see this as part of the solution to the cost-of-living challenge, not part of the problem.”
Business Groups Response
Peak business body the Australian Commerce of Chamber and Industry (ACCI) called for a pay rise of no more than 2%.
ACCI CEO Andrew McKellar said today’s decision “tests the acceptable limits for business”.
McKellar said small businesses aren’t in a position to absorb wage increases
Union Response
The Australian Council of Trade Unions (ACTU) called for a 5% increase and a further 4% for workers in female-dominated industries like teaching and nursing.
The ACTU said the increase is not as high as it would like, but is a step forward in the right decision.
“Any day working people get a pay increase is a good day,” ACTU Secretary Sally McManus said.
