Australia’s minimum wage up $21.60 a week

About 2.2 million working Australians will receive an extra $21.60 in their weekly pay – or $1090 a year – on July 1 after the Fair Work Commission increased the national minimum wage by three per cent.

The increase applies to workers who have their pay set by the national minimum wage or a modern award, about 10 per cent of the nation’s total workforce, and will see their minimum wage rise to $740.80 a week.

Australia already boasted the highest minimum wage in the world, according to data from Germany’s Wirtschafts-und Sozialwissenschaftliches Institut (WSI), CEOWorld reported.

Delivering the decision this afternoon, Fair Work Commission (FWC) president Iain Ross said the economic conditions justified a lower increase than the 3.5 per cent pay rise awarded last year.

“We are satisfied the level of increase we have decided upon will not lead to any adverse inflationary outcome and nor will it have any measurable negative impact on employment,” said Justice Ross.

“However, such increases will mean an improvement in the real wages of employees who are reliant on minimum wages and an improvement in their living standards.”

The Australian Chamber of Commerce and Industry, Australia’s largest business network, said the 3 per cent rise in the minimum wages will put jobs in danger and risk the viability of some small businesses. It has lodged a submission for a 1.8 per cent increase.

“Australia already has one of the highest minimum wages in the world, and continuously increasing minimum wages by significantly more than inflation has consequences,” Australian Chamber CEO James Pearson said in a statement.

“It will cost Australian employers an additional $3.1 billion per year.

“The health of our labour market is relatively strong. However, parts of the country and some industry sectors are finding the going tough. Growing global uncertainty and a recent pause in employment growth point to risks.

“Employers respect the independent decisions of the Fair Work Commission, but a third straight increase well in excess of inflation will be difficult for businesses, particularly small businesses, to absorb.

“These increases will make it that much harder for more than 680,000 of our fellow Australians who are unemployed, and a further 1.1 million underemployed, to find a job or more hours of work.”

The Australian Industry Group, which had called for a 2 per cent increase, said it was pleased the FWC had returned to a “more moderate level” compared to the previous two years’ increases.

“The impact of a 3 per cent wage increase on employers should not be underestimated. The economy has slowed, businesses are struggling to cope with high and rising input costs, especially energy costs,” said Ai Group chief executive Innes Willox.

The Australian Council of Trade Unions had called for a 6 per cent or $43 a week increase. The ACTU labelled the FWC decision a win for workers but said it was not enough to be considered a ‘living wage’.

“This is a welcome pay rise for millions of low paid workers, especially in the face of further penalty rate cuts in a few weeks,” said ACTU assistant secretary Liam O’Brien.

Justice Ross acknowledged that while living standards for the lowest paid workers had improved, some continue to experience “significant disadvantage”.

“Some low paid, award-reliant employee households have disposable incomes which are less than the 60 per cent of median income relative poverty line,” he said.

He added data shows the labour market remained strong, despite slowing economic growth and previous pay rises.

“No party identified any data which demonstrated adverse employment effects arising from the previous two review decisions,” said Justice Ross, referring to the previous 3.3 per cent and 3.5 per cent increases.

The FWC decision came as wage growth remains stuck around historically low levels, with the Bureau of Statistics’ latest Wage Price Index stating annual wage growth of 2.3 per cent for the third quarter in a row, ABC News reported.

Reserve Bank governor Philip Lowe told a parliamentary committee a 3.5 per cent increase in the minimum wage would make sense and argued stagnant household incomes were a threat to consumer spending.

“Many people borrowed assuming their incomes would grow at the old rate and they haven’t,” he said.

“They’re having more difficulty, they’ve got less free cash and so they can’t spend, so this is why I’ve put so much emphasis on the need for a pick-up in wage growth.”

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