About 3 million workers on minimum and award wages will receive a pay rise after the Fair Work Commission's annual review, with the lowest paid getting a 6% increase from July.
Pay rise details
The Fair Work Commission has announced a 4.75% increase to minimum and award wages, benefiting approximately 2.7 million workers. An additional 100,000 of the country's lowest paid employees will receive a higher 6% rise, lifting their hourly rate from $24.95 to $26.44. For a 38-hour week, their weekly wage will rise from $948 to almost $1,005.
Commission president Adam Hatcher described the decision as "particularly challenging" due to the Middle East conflict driving a global oil shock and higher fuel costs. He noted that wage rates for most award employees remain lower than in mid-2021, before post-COVID inflation spikes.
Economic context
Last year's minimum wage increase was 3.5%, while inflation stood at 4.2% in the year to April. The Reserve Bank of Australia forecasts inflation will reach 4.8% by June, nearly double its 2.5% target. Hatcher said a wage increase of "well over 5%" would be needed to close the real wage gap.
Treasurer Jim Chalmers welcomed the decision, saying it "strikes a very effective balance." He noted that minimum wages have risen by 30% since Labor came to power in May 2022, or 12% after accounting for cost of living.
Reactions
The Australian Chamber of Commerce and Industry warned the increase "could be the tipping point for some businesses," especially small businesses in retail, hospitality, and accommodation. However, ACTU secretary Sally McManus said workers are also customers, and cutting their spending would hurt businesses.
AMP economist My Bui said the decision was "understandable" but warned it could lead to larger pay claims and add to services inflation. She now forecasts another rate hike in November, taking the peak cash rate to 4.85%.
