Millions of Australian workers to secure 3.5% pay rise
It takes the full-time minimum weekly wage to $948, marking a $32.10 rise, as the minimum hourly pay goes up by 85 cents to $24.95. The decision will affect 2.7million Australians, or one in five workers, who are employed under one of 121 awards, along with the 180,000 people on the minimum wage. Low-paid workers in the retail, hospitality, healthcare and administrative support sectors are the key beneficiaries.
Fair Work Commission president Adam Hatcher delivered the industrial umpire's decision at 10am on Tuesday, noting the low-paid are 'disproportionately female' and had suffered cuts in real wages adjusted for inflation until recently. 'The principal consideration, which has guided our decision, is the fact that since July 2021, employees who are reliant on modern award minimum wages or the national minimum wage have suffered a reduction in the real value of their wage rates,' he said. 'This reduction in real modern award wages and the national minimum wage has been a result of the spike in inflation which commenced in 2021 and peaked in late 2022. The result has been that living standards for employees dependent on modern award wages have been squeezed and the low paid have experienced greater difficulty in meeting their everyday needs.'
Justice Hatcher, a Labor appointee, said that while other Fair Work Commission decisions were generous, the industrial umpire had been concerned about a wage-price spiral and had therefore only awarded previous increases in line with inflation. 'The continuation of this inflationary episode has meant that over the last three annual wage review decisions, the Fair Work Commission has repeatedly deferred taking any action to reverse this decline in real wages out of a concern that this might result in the persistence of higher inflation,' he said. The Australian Chamber of Commerce and Industry, the nation's biggest employer group, had argued for a 2.5 per cent increase that barely kept pace with inflation while the Australian Council of Trade Unions had argued for a 4.5 per cent rise.
The latest increase is much smaller compared with recent years, given inflation has moderated since reaching a 32-year high of 7.8 per cent in late 2022. But it is a full percentage point higher than the headline inflation rate of 2.4 per cent. Employment and Workplace Relations Minister Amanda Rishworth said the Fair Work Commission decision was responsible, after the government argued for an increase that was above inflation that would give workers a meaningful real wage rise. 'Our government believes that workers should get ahead with an economically sustainable real wage increase,' she said. 'A real wage increase provides further relief to our lowest paid workers who continue to face cost-of-living pressures.'
Under Labor, the minimum wage went up by 8.6 per cent in 2023 as awards rose by 5.75 per cent, which had been the biggest increase since 1990. This followed a 5.2 per cent increase in 2022 that at the time had been the highest increase in the minimum wage since the mining boom in 2006. The headline and underlying rates of inflation are now within the Reserve Bank of Australia's two to three per cent target, giving it room to cut interest rates. This is something the Fair Work Commission noted.
'The Reserve Bank of Australia's assessment that inflation has sustainably returned to its target range of two to three per cent indicates that this inflationary episode is now over,' Justice Hatcher said. 'That provides us with an opportunity to go at least some of the way towards correcting what has happened over the last four years by awarding a real increase to modern award wages and the national minimum wage. We are concerned that if this opportunity is not taken in this annual wage review, the loss in the real value of wages which has occurred will become permanently embedded in the modern award system and the national minimum wage, and a reduction in living standards for the lowest paid in the community will thereby be entrenched.'
With unemployment still low at 4.1 per cent, workers outside of awards have more leeway to bargain for higher wages. But weak productivity also means wage increases have to be passed on to customers, potentially feeding into inflation. The Australian Industry Group's chief executive Innes Willox slammed the latest 3.5 per cent increase in awards and the minimum wage at a time of weak productivity growth.
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