Australia’s lowest-paid workers will receive $33.10 more a week from July 1 – the minimum weekly pay packet for about 180,000 people rising to $915.90 – after a rise of 8.6 per cent last year to tackle cost-of-living pressures.
The Fair Work Commission has announced a 3.75 per cent increase to the minimum wage.Dominic Lorrimer
The annual decision,announced on Monday,will feed into a broader economic debate between businesses and unions about the competing pressures of wages and living costs,as well as whether the rise is enough for workers to weather inflation.
Its effects flow through to the pay packets of about 2.6 million Australians whose wages are set by industry awards and who last year received a 5.75 per cent rise in a two-tiered decision by the commission.
Fair Work Commission president Adam Hatcher shot down the Australian Council of Trade Union’s push for a 9 per cent pay rise for occupations with workforces dominated by women while announcing a review into pay equity.
Hatcher said in the year to March had contributed to the commission’s decision to increase wages by 3.75 per cent.
Millions of Australians will get a pay rise after the minimum wage was increased by 3.75 per cent.
“It is not appropriate at this time to increase award wages by any amount significantly above the inflation rate,” he said.
“We have also taken into account that modern award-reliant employees will shortly receive the benefit of the stage 3 tax cuts and the budget cost-of-living measures,which are projected to increase real household disposable incomes over the next 12 months.”
The upcoming increase to the superannuation guarantee – from 11 per cent to 11.5 per cent – was treated as a “moderating factor”,Hatcher said.
ACTU secretary Sally McManus said the industrial umpire had accepted the argument “that the wages of workers in feminised industries need to be higher” but she said there wasn’t agreed that “it should start immediately”.
“Unions will continue to fight for these increases through the process the Commission has established,” McManus said.
The Australian Chamber of Commerce and Industry had called for a 2 per cent minimum wage rise while the Australian Industry Group argued a 2.8 per cent increase was a “reasonable balance”.
The Australian Council of Trade Unions had called for a 5 per cent increase to the minimum wage,with an in industries where women are a large majority of the workforce.
While the commission did not give women-dominated sectors a separate increase,Hatcher said the commission would set up a program to address gender undervaluation for workers in:early childhood education and care;disability home care and other social and community services;dental assistants,medical technicians,psychologists and other health professionals;and pharmacists.
The program is expected to be completed by next year’s review.
ACCI head Andrew McKellar said on Monday that small businesses would have to pass on higher costs to consumers as a result of “increased red tape” and the Fair Work Commission’s decision.
“This tests the limits of what’s acceptable from a business point of view,it will do little to take inflationary pressure out of the economy and that was our objective,” he said.
“I think here,what[the commission’s] doing is a leap of faith and what we will have to see is what happens to productivity growth over the coming quarters.”
The Albanese government had repeated its call from previous submissions that the lowest-paid workers should have their pay increased in line with inflation to ensure their real wages do not go backwards.
Employment Minister Tony Burke welcomed the commission’s decision.
“We don’t second guess the decision. I don’t think you’ll ever find a wage review that has ever taken place without the unions having requested more and businesses having requested less,” he said.
Coalition employment spokeswoman Michaelia Cash said the decision showed wages were barely keeping up with inflation.
“The best way to deliver sustainable real wages growth is to bring down inflation – which is only going to be higher for longer under Labor’s failed economic management,” she said.
Senior Westpac economist Justin Smirk said the Reserve Bank would not be worried by the decision.
“The RBA would be comforted by the decision. Not only did the FWC note that they considered the rising cost of living for the workers affected by the decision,but they also took into account the rejigged stage three tax cut and broader cost-of-living relief those workers will be receiving from July 1,” he said.
“We see this as a balanced decision that provides are reasonable real wage increase for workers facing cost-of-living pressures while ensuring wage outcomes are more in line with labour productivity.”
Annual inflation dipped to 3.6 per cent in the year to March,down from 4.1 per cent in the 12 months to December.
Treasury has forecast inflation will drop back within the Reserve Bank’s target band of 2 to 3 per cent by the end of the year,however,the RBA – which did not have Treasury’s information at the time – that inflation would still be above 3 per cent next June.
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