The Fair Work Commission (FWC) has today announced a rise in the national minimum wage of 5.2 per cent, affecting 2.7m workers.
The Commission also announced an increase for workers on award wages, with a summary published by the FWC reading: ‘In effect, modern award minimum wage rates above $869.60 per week will receive a 4.6 per cent adjustment, wage rates below $869.60 per week will be adjusted by $40 per week.’
The decision will come into effect for most sectors from July 1, however, the FWC also ruled that the increase for the aviation, tourism and hospitality industries will be delayed until October 1. The Commission stated it ‘was satisfied that exceptional circumstances exist’ for these sectors as a result of the pandemic, and that these circumstances warrant such a delay.
The weekly minimum wage now sits at $812.60, or $21.38 an hour, up from the current $772.60 per week ($20.33 per hour). The decision came after the FWC panel considered submissions from business groups, unions and the federal government.
The Commission’s summary referred to a ‘sharp rise in the cost of living since last year’s Review’ which saw a raise of 2.5 per cent. The FWC also stated that rising ‘inflation erodes the real value of workers’ wages and reduces their living standards. The low paid are particularly vulnerable in the context of rising inflation.’
Prime Minister Anthony Albanese welcomed the decision, speaking at a Press Conference at Gladstone in Regional Queensland, he described minimum wage workers as “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.”
Albanese, who had campaigned partially on a pay rise of a dollar an hour for minimum wage workers, highlighted the current cost of living crisis when responding to the Commission’s decision.
“That lifts the minimum wage up by a dollar and five cents an hour, or $40 a week. It makes a difference to people who are struggling with the cost of living.”
“We did not want people who were on the minimum wage to go backwards.”
Sally McManus, Secretary of the Australian Council of Trade Unions (ACTU), which includes the Hospitality Workers Union, also welcomed the decision and commented that the rise will affect a quarter of Australian workers, once including award wages.
“The union movement fought hard for this increase, standing up for the quarter of Australian workers who rely on this process for a pay rise,” McManus said.
Nevertheless, McManus believes that there is more to be done.
“This Annual Wage Review is one tool we have to generate wage growth, but it only affects one in four workers – we need wage growth across the economy.”
In contrast, the Australian Chamber of Commerce and Industry described the FWC’s decision as a ‘$7.9 billion wage hike [that] will hurt small business.’
The Chamber’s Chief Executive, Andrew McKellar, stated that: “Many award reliant business were severely disrupted by the COVID-19 pandemic and are only just beginning to recover. Imposing unaffordable wage increases on these small businesses will put jobs at risk, not create them.”
McKellar also stated that since the introduction of the Fair Work Act, the minimum wage in Australia had be raised above inflation 11 times.
His organisation, he said “proposed a balanced and responsible increase of three per cent in this year’s annual wage review, reflecting the mounting costs faced by business and the risks of higher inflation.”
In a update from Marque Lawyers (which counts Diageo amongst its clients), the firm contextualised the rise amongst historic norms.
‘To put this in perspective, the 5.2 per cent increase is one of the largest we have seen, with previously rises typically hovering between two per cent and 3.5 per cent. However, the FWC said it was warranted due to the tough times low paid employees are facing.’
Nevertheless, this raise is somewhat unusual as award wages have not risen entirely in lockstep with the minimum wage rise, resulting in a slight real term decline in pay for some award-wage workers.
The FWC addressed this in its decision summary: ‘The Panel acknowledged that the increases determined will mean a real wage cut for some award-reliant employees but noted that this is an issue that can be addressed in subsequent Reviews.’