The nation’s lowest paid workers will have their wages increased by 3.75 per cent as a measure to help household deal with inflation.
The increase means the national minimum wage will be $915.90 per week, up from $882.80, or $24.10 per hour, up from $23.23.
But the Fair Work Commission has said it was inappropriate to increase award wages by much above the inflation rate of 3.6 per cent given productivity growth had only just started to increase and some sectors employing people on the minimum wage were not enjoying strong profit growth.
Impending tax cuts and cost-of-living measures in the Federal Budget have also been factored into the commission’s decision.
“We consider therefore that this increase is consistent with the forecast return of the inflation rate to below 3 per cent in 2025,” the commission on Monday said.
The pay bump takes effect from July 1 and covers minimum wage and also those on modern awards, which is about 20.7 per cent of the workforce, or about 2.6 million people.
Treasurer Jim Chalmers said in a post on X “strong and sustainable wage growth is part of the solution.
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The increase is below what unions wanted, with the ACTU pushing for 5 per cent, but above what business wanted, with the Australian Chamber of Commerce and Industry advocating for 2 per cent.
Council of Small Business Organisations Australia chief executive Luke Achterstraat said more pressure was headed for the sector.
“Small business owners are struggling with 43 per cent currently not breaking even,” he said. “Owners are paying themselves less than the average salary and working longer than the median to keep the lights on.”
The commission’s decision follows an increase of 5.2 per cent in 2022 and 5.75 per cent last year.
Wages as measured by the wages price index were up 4.1 per cent in the year to March 31, according to the Australian Bureau of Statistics.
“The tighter labour market and recent administrative wage decisions have resulted in nominal wages growing near their fastest rate in nearly 15 years,” Treasury secretary Steven Kennedy told Senate Estimates on Monday.
National Australia Bank economists said earlier on Monday said an increase of about 4 per cent was expected.
“Award wages are set by the Fair Work Commission, considering relative living standards, the needs of the low paid, the performance and competitiveness of the economy, gender equality and job security,” they said.
More to come…