Wages up for almost 3 million low-paid workers

The Fair Work Commission has increased modern award wages by 4.75 per cent and the National Minimum Wage by 6 per cent. Photo: FWC. Close to three million of Australia’s lowest-paid workers will receive a wage increase starting next month. The Fair Work Commission handed down its annual minimum wage decision on Tuesday (2 June), increasing modern award wages by 4.75 per cent and the National Minimum Wage by 6 per cent. About 2.8 million workers will benefit from the wage increase, while some 100,000 of the country’s lowest-paid employees will get the minimum wage rise. It is the first time the National Minimum Wage is above $1000 per week, and it will increase from $24.95 to $26.44 per hour; $948.00 to $1004.90 per 38-hour week; and $49,296.00 to $52,254.80 per year. The Annual Wage Review has more marked effects for employers and employees in industry sectors such as hospitality, retail, health care and social assistance, and administrative support services. “The characteristics of those workers who are dependent on modern award minimum wage rates are markedly different from the workforce as a whole,” the Commission’s decision said. “They are over 60 per cent female, over 70 per cent work part-time hours, more than half are casual employees, and more than a third are low paid. “Because of the part-time and low-paid characteristics of the modern award-reliant workforce, the wages paid to them constitute only about 11.2 per cent of the national ‘wage bill’. “This means that the direct effect of the review on wage growth across the whole workforce is limited. “However, the review is obviously of significance to lower-paid workers in the community who rely upon this process to receive any increase in their pay, and to those who employ them.” Treasurer Jim Chalmers described the FWC’s decision as a “real wage increase” providing cost-of-living relief. “This is the pay rise millions of Australian workers need and deserve,” he said. “This is the sustainable real wage increase that we called for in our submission to the Fair Work Commission.” The Opposition, however, says the wage increases are not sustainable because inflation is not sustainable. “There is little comfort in a wage increase if Labor’s inflation simply eats it away,” deputy opposition leader Jane Hume said. “The best way to improve living standards for all Australians is to get inflation down, lift productivity and support businesses to grow and employ more Australians.” Inflation was 4.2 per cent in the year to April, with some projections suggesting the Consumer Price Index could rise above 5 per cent due to the war in the Middle East and the ongoing fuel crisis. Last year’s minimum wage increase was 3.5 per cent. The Australian Chamber of Commerce and Industry wanted a similar increase this year and has criticised the latest announcement. ACCI’s chief of policy and advocacy David Alexander said the peak business body was disappointed with the FWC’s decision. He said the increases will add to cost pressures across the economy at a time when many businesses, particularly small businesses, have very limited capacity to absorb additional costs. ACCI estimates the decision will impose an economy‐wide cost of around $11.7 billion. “Today’s decisions further de-link wage outcomes from productivity, and economic activity will suffer as a result,” Mr Alexander said. “For businesses that are already struggling with interest rate hikes, high inflation and high fuel prices, this decision, putting up wage costs, will only add to the burden.” The Greens say this decision will “further erode real wages” for some of the nation’s lowest-paid workers. Employment spokesperson Barbara Pocock said the increase amounts to a “real wage cut” for millions of Australians. “Even with this 4.75 per cent increase in the minimum wage, low-paid workers still face an uphill battle as wages have failed to keep up with inflation,” she said. “With inflation expected to rise to 4.8 per cent, the Fair Work Commission has decided to erode the wages of some of the lowest-paid workers. “Under Labor, we’re seeing interest rates rise, real wages fall and a tax system that hits workers harder than billionaires. “Nearly 3 million low-paid workers in Australia are playing catch-up, facing rising grocery prices in a cost-of-living crisis, and rents increasing at well above inflation.” ACOSS welcomed the increase but called on the Federal Government to provide further financial assistance to community sector organisations to fully cover the rising costs of service delivery for the lowest-income households.