Minimum wages will increase by at least $ 40 a week, with the hourly rate increase from $ 20.33 to $ 21.38, according to the Fair Work Commission.
The commission ruled on Wednesday in its annual salary review, giving a 5.2% increase to the national minimum wage and a 4.6% increase to the minimum wage, amid a tight labor market and soaring inflation.
The decision sets the pay of at least 2.7 million Australians in the national minimum or awards and will take effect from 1 July.
But the commission decided that the increase would be delayed until October 1 in the aviation, tourism and hospitality sectors due to “exceptional circumstances”, including its slower recovery from the Covid recession.
Prime Minister Anthony Albanese praised the decision and said he vindicated his position during the election campaign when he said he would “absolutely” support a salary increase in line with the 5.1% inflation rate.
“It makes a difference for people who are struggling with the cost of living, and justifies our position that we took in making a different presentation to the Fair Work Commission, which said we didn’t want people covering the minimum wage go. back, “Albanese told a news conference in Gladstone.
“Many of those people who earn the minimum wage are the heroes who saw us through the pandemic. These workers deserve more than our gratitude, they deserve a raise and today they have it.”
The unions had called for a 5.5% increase in the national minimum from $ 20.33 to $ 21.45 an hour, while groups of employers had suggested more modest increases of about 2.5%.
A presentation by the Albanian government called for the wages of low-paid workers not to fall, which means a 5.1% increase in line with general inflation, which the Reserve Bank of Australia has suggested will reach 7% by the end of the year.
The chairman of the Fair Labor Commission, Judge Iain Ross, acknowledged that by ordering a lower inflation rate some workers would receive a real pay cut, but suggested that this could be fixed in later years.
The trade union movement appreciated the decision.
Sally McManus, secretary of the Australian Council of Trade Unions, said the unions had “fought hard” for the increase against “employers pushing for big real wage cuts”.
But McManus said the revision only sets wages for one in four workers, while changes to bargaining laws were needed to help achieve “wage growth across the economy.”
ACTU Secretary Sally McManus speaks to reporters in Melbourne on Wednesday. Photography: Diego Fedele / AAP
The executive director of the Australian Chamber of Commerce and Industry, Andrew McKellar, warned that the decision was a “risk to the economy” that would add $ 7.9 billion to the costs of entrepreneurs.
McKellar proposed that the centralized wage setting should be set aside for 180,000 workers with the minimum wage, while the 2.5 million people awarded should have their wages set “on a case-by-case basis.”
“We need to return to a much more effective entrepreneurial bargaining, to a flexible market-driven wage setting,” he said.
Australian Industry Group CEO Innes Willox said the decision would “add fuel to the fire of inflation”.
Albanese shrugged off questions about the impact of rising wages on companies, saying the money would help prop up the economy.
“If you have the minimum wage, you are also spending every dollar you have. Every dollar you receive will go back into the circulating economy,” the prime minister said.
“It will not be used for savings or holidays abroad. It will be used to eat at the table, for the children of people with a minimum wage. That’s what it’s all about.”
Minister of Employment and Labor Relations Tony Burke claimed that a salary increase of this level “would never have happened” under the former coalition government.
“The era of deliberately low wages by the National Liberal Party is over today,” he said, alongside Albanese in Gladstone.
“People will see in their bank accounts what the change of government means … For the first time in almost a decade, we have had a government advocating for a real wage increase and it will now be implemented.”
Earlier, McManus said unions had been “aware of not raising inflation, so we have never called for a pay rise, this is more than inflation and productivity.”
The Fair Labor Commission ordered that modern minimum award rates be raised by 4.6% “subject to a minimum increase of $ 40 per week,” meaning employees with awards earning more than $ 870 per week will receive an increase of 4.6%, while those below that level will get $ 40. more per week.
Ross said the “most significant changes” since last year’s decision were “a sharp rise in the cost of living and the strengthening of the labor market.”
He noted that low-wage workers are “especially vulnerable” to high inflation, which “erodes the real value of workers’ wages,” although it also has an impact on corporate costs.
Ross noted that unemployment had fallen from 5.5% last year to 3.9%, while inflation had risen from 1.1% to 5.1% overall from 3.7%. in underlying terms.
He said the tightening of the labor market and higher inflation weighed in favor of an increase of more than 2.5% last year. He noted that calls from business groups for more modest increases would lead to larger real wage cuts.
But Ross rejected calls from unions for a larger increase, finding that “in the current economic circumstances, [that would] they pose a real risk of significant adverse effects on the national economy ”.
“We acknowledge that the increases we have determined will result in a real pay cut for some employees dependent on awards.
“This is an issue that can be addressed in future reviews.
“We are pleased that there are exceptional circumstances, such as the warranty or the delayed operating date for certain modern awards … in the aeronautics and hospitality industry.”