Yahoo Finance Millions of Aussie workers to get pay rise as minimum wage increased from July 1
Fair Work has handed down its annual wage decision today, impacting around 2.6 million workers.
Millions of Aussies on award and minimum wages will receive a pay rise from July 1. The Fair Work Commission handed down its annual wage decision today, which will impact 2.6 million Aussies or one in four workers.
Both minimum and award wage workers will receive a 3.75 per cent increase. The minimum wage will increase to $24.10 per hour or $915.90 per week. Changes will begin on the first full pay period on or after July 1.
Fair Work decides whether to increase the minimum wage for employees and by how much each year. It said cost-of-living pressures faced by employees on award wages were its "primary consideration" in determining the level of increase.
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"Modern Award minimum wages remain in real terms lower than they were five years ago, notwithstanding last year's increase of 5.75 per cent," Fair Work Commission president Adam Hatcher said.
"Employee households reliant on award wages are undergoing financial stress as a result."
Hatcher also noted it was "not appropriate" to increase award wages by any amount "significantly above the inflation rate". He noted labour productivity was at a high, while the labour market and business profit growth remained strong overall.
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The Commission said it also took into account the benefit of the Stage 3 tax cuts, along with other cost-of-living measures announced in the federal budget and the upcoming increase to the super guarantee amount to 11.5 per cent.
Workers received a substantial boost to wages last year, with a 5.75 per cent increase for awards and an 8.6 per cent jump for the national minimum handed down based on low unemployment, falling wages and high inflation.
Decision could be 'bad news' for RBA interest rates
Economists have warned today's increase to the minimum wage could complicate the Reserve Bank’s inflation fighting efforts.
VanEck head of investments and capital markets Russel Chesler said the increase was "bad news" for those hoping for a rate cut this year. He expects the RBA won't cut rates until 2025 and possible not until the middle of the year.
“While wage growth eased for the second consecutive quarter in March, today’s minimum wage increase – affecting approximately one in four workers directly or indirectly – is likely to stall that progress," Chesler said.
"This may push up wages in the private sector as well, as we see strong labour demand persisting given there are no signs of the low unemployment rate changing any time soon."
However, Hatcher has argued the 3.75 per cent would only make a "modest contribution" to the total amount of wages growth this year.
"We consider, therefore, that this increase is consistent with the forecast return of inflation rate to below 3 per cent in 2025," he said.
AMP chief economist Shane Oliver had been forecasting a higher 4 per cent increase to wages and said even this figure was not so high as to add to the risk of "wage price spiral".
Cost-of-living pay rise to stop low-paid workers 'going backward'
The 3.75 per cent increase is lower than what unions wanted but higher than what business groups had been pushing for.
The Albanese government said it wanted to make sure the “real wages of Australia’s low-paid workers do not go backwards”, echoing language it had used in previous years.
This, in effect, argued for an increase of at least the rate of inflation. The most recent figures showed inflation had risen by 3.6 per cent in the 12 months to the March quarter.
The Australian Council of Trade Unions (ACTU) was calling for a 5 per cent increase in minimum and award wages. It’s argued the increase is necessary to help workers deal with cost-of-living pressures and recover real wages lost during the pandemic.
Meanwhile, the Australian Chamber of Commerce and Industry pushed for a 2 per cent increase, which would amount to a real wage cut. It argued business conditions have weakened significantly.
Australian Industry Group proposed a wage increase of 2.8 per cent, arguing the economy was weakening.
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