Australia’s minimum wage to increase by AUD 1.20 per pour

Australia’s minimum wage is set to rise by AUD 1.20 (USD 0.79) per hour starting from July 1, 2023, benefiting the country’s lowest paid workers. The Fair Work Commission recently announced a 5.75% increase in the National Minimum Wage, raising the hourly pay rate from AUD 21.38 (USD 14.13) to AUD 22.60 (USD 14.94) for these workers.

Additionally, all modern award minimum wage rates will also see a 5.75% increase, effective from the first full pay period on or after July 1, 2023. Modern awards outline the minimum employment conditions and terms beyond the National Employment Standards (NES), including aspects like pay and working hours.

Despite the wage increase, workers will still experience a real wage decrease due to a 6.8% inflation rate over the past year, as of April. The decision by the Fair Work Commission falls between the 3.8% requested by some business groups, such as AiGroup, and the 7% sought by the Australian Council of Trade Unions (ACTU).

More than 20% of Australia’s workforce receives minimum award rates, while 0.7% earn the national minimum wage, which is the lowest rate. Fair Work Commission president Adam Hatcher acknowledged the challenges faced while making the decision, including declining wages, high inflation, and an anticipated economic slowdown.

In determining the wage increase, the commission considered the impact of inflation on the financial well-being of low-paid workers, as well as the upcoming rise in the superannuation guarantee from 10.5% to 11%. The commission also took into account the effects of a weakened job market on casual employees and relevant industries.

The Australian Chamber of Commerce and Industry (ACCI) expressed concerns about the increase, stating that it would impose an AUD 12.6 billion (USD 8.3 billion) wages burden on small and family businesses. ACCI chief executive Andrew McKellar emphasized the negative implications for the 260,000 small and family-owned businesses that pay minimum and award wages, and he criticized the decision for potentially exacerbating high inflation amid a deteriorating economic outlook.

The wage increase fell short of the ACTU’s desired 7% raise. Sally McManus, the secretary of the ACTU, acknowledged that the increases would provide crucial support to millions of working people during the current cost-of-living crisis. She described it as a critical increase that would help these individuals stay afloat.