Millions of Australians will start taking home more cash from tomorrow when the Fair Work Commission’s decision to increase the national minimum wage takes effect.
Early last month, the commission ruled that the national minimum wage, and modern award minimum wages, should increase by 3.5 per cent.
About three million people are estimated to stand to benefit from the increase from July 1.
The current national minimum wage is $24.10 per hour, or $915.90 per week. A 3.5 increase will increase that to $24.94 an hour, or just over $30 more a week.
“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,” Fair Work Commission president Justice Adam Hatcher said.
Hatcher said that this had been due to the major spike in inflation which had begun in 2021.
“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,” he said.
However, with the Reserve Bank of Australia deeming inflation to be “sustainably” within the target rate of between 2 and 3 per cent, Hatcher said, it was appropriate to boost minimum wage payments above inflation.
The Australian Bureau of Statistics reported in March that inflation was at 2.4 per cent, unchanged from the previous quarter.
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Australian Council of Trade Unions secretary Sally McManus praised the decision, despite the ACTU backing a larger 4.5 per cent increase.
“This decision delivers a 1.1 per cent real wage increase, one of the largest real wage increases the Fair Work Commission has awarded,” McManus said.
“This wage increase means those who are paid award wages will start to get ahead again, easing pressure on their weekly budgets and part of the stress that comes from having to cut back on the basics.”
CreditorWatch chief economist Ivan Colhoun warned that the increase could “put a floor” under inflation.
“I’m not opposed to the increase – I see some real wage catch-up as another important part of rebalancing the economy, though I’m not as convinced by the commission’s argument that this inflationary episode is now behind us,” he said.
“Living costs and business costs remain very elevated and have been a very large part of the pressures on many businesses in this cycle. The rise makes it more important that businesses pursue productivity improvements.”
