Yahoo Finance 2.6 million Aussies to get major pay rise
Workers will get a 5.2 per cent wage boost under the Fair Work Commission’s (FWC) decision on the minimum wage today, amounting to a $40 per week increase.
That means the lowest paid workers will now be paid $21.38 per hour, or $812.60 per week.
"The panel observed that this level of increase will protect the real value of the wages of the lowest-paid workers," the commission wrote in its decision.
The commission noted that the most significant changes since last year’s decision was the sharp rise in the cost of living and the strengthening of the labour market.
"The panel decided to provide a proportionately higher increase to low-paid employees noting that the present circumstances warranted an approach which affords a greater level of support to the low paid while seeking to constrain inflationary pressures," the commission said.
The new minimum wage will come into effect on July 1 and impacts millions of employees.
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How much did people want it to go up by?
The FWC is an independent body that sets the minimum wage and employment conditions for Australian workers.
In June each year, it reviews the minimum wage and makes a decision on how much the lowest-paid workers should get.
Various organisations make submissions ahead of the minimum wage decision to make their case for how Australia’s lowest-paid workers should get.
This includes the major political parties.
The major parties clashed over the minimum wage rate during the 2022 federal election campaign, with Labor leader Anthony Albanese attracting criticism from former prime minister Scott Morrison for backing an increase to the minimum wage in line with inflation.
“It’s like throwing fuel on the fire of rising interest rates and rising cost of living,” Morrison said at the time.
Labor did not back down on its stance, arguing that the lowest paid workers should “not be going backwards”, meaning the party wanted the minimum wage to keep pace with rising inflation of 5.1 per cent.
The Labor Government’s subsequent submission to the FWC in June called for a rise in the minimum wage, but did not include a figure.
Outside of the political parties, the Australian Council of Trade Unions called for a 5.5 per cent increase to the minimum wage as part of the Annual Wage Review.
Some business groups support smaller boosts to the minimum wage, such as the Australian Chamber of Commerce and Industry (ACCI), which supported a 3 per cent increase.
Will higher minimum wage drive up the cost of living?
Business groups and the Liberal Party have argued a 5 per cent boost to minimum wage would fuel inflation and increase the cost of living.
Indeed, higher wages do contribute to business overheads and can lead to higher prices for goods and services, especially in sectors where wages take up a large portion of a business’s expenses.
However, research from The Australia Institute found a 5 per cent increase to the minimum wage would have a negligible impact on inflation.
In food-and-beverage businesses, where wages account for 35 per cent of expenses, the increased cost passed onto customers should only be 2.3 per cent.
That would amount to 9 cents extra for a cup of coffee and 6 cents extra for a $7 schooner of beer.
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