The national minimum wage will be increased by 5.2 per cent, lifting the rate from $20.33 to $21.38 an hour. This takes the weekly minimum wage to $812.60 a week – a $40 per week increase.
The president of the Fair Work Commission Iain Ross made the announcement this morning, noting the “sharp increase in the cost of living and the strengthening of the labour market” as being the most significant changes since last year’s review decision.
Modern award minimum rates above $869.60 per week will increase by 4.6 per cent, while wage rates below that level will be adjusted by $40 per week.
“At the aggregate level, labour market performance has been particularly strong. The unemployment rate has fallen to 3.9 per cent compared to 5.5 per cent in April 2021, at the time of the last review,” Ross said.
“The improvement in the labour market is forecast to continue in the period ahead. There has also been a sharp rise in the cost of living since last year’s review. At the time of last year’s decision, the Consumer Price Index and the underlying measure of inflation both stood at 1.1 per cent.
“The comparable figures now stand at 5.1 per cent for the CPI and 3.7 per cent for the trimmed mean, or the underlying inflation rate. There is also a marked difference in the inflation forecasts.”
The new rates will be set from July 1, 2022.
“Absent exceptional circumstances, the Act provides the variations to a national minimum wage order and to Modern Award minimum wages are to operate from 1 July in the financial year following the review we are satisfied that exceptional circumstances exist, such as the warranty or delayed operative date for certain modern awards,” Ross said, adding that the increase in the minimum wage will be delayed to 1 October in the aviation, tourism and hospitality sectors.
“These awards are in the aviation tourism and hospitality sector.”
“The variation determinations in respect of [those] modern awards … will come into operation on 1 October 2022.”
“In respect of the remaining modern awards, we have not been persuaded that there are exceptional circumstances, such as to warrant a delayed operative date in the variation determinations arising from this review.”
Today’s decision will impact the 2.7 million workers on the national minimum or award minimum wages in Australia.
Ross explained that the low-paid are “particularly vulnerable” to high inflation, which “erodes the real value of workers’ wages”.
He added that these figures weigh in favour of a higher increase since employers’ groups’ urge for a moderate increase of roughly 2.5 per cent would cause real pay cuts.
“We acknowledge that the increases we have determined will mean a real wage cut for some award-reliant employees,” Ross said. “This is an issue that can be addressed in subsequent reviews.”
“We accept that the approach we have adopted will result, albeit minor, compression in relativities. But that consideration is to be balanced against the need to provide greater relief to low-paid workers in the context of rising cost of living pressures.”
“Given the current strength of the labour market, the adjustments we propose to make will not have a significant adverse effect on the performance and competitiveness of the national economy.”
“In our view, awarding an increase in modern award minimum wages of the magnitude proposed by ACCER, some 6.5 per cent, and the ACTU – 5.5 per cent, would, in the present economic circumstances, pose a real risk of significant adverse effects to the national economy.”
Head of ACTU, Sally McManus, called the decision “reasonable” and “fair” and said she was “really happy with the outcome.”
“We think it is going to make a significant difference to the pressures that low-paid workers are under with cost of living rising,” she said in a video statement on Twitter.
“The union movement fought so hard for this increase across pretty heavy crosswinds. We also had to oppose what the employers were arguing for which was very significant real wage cuts at a time when their profits are up 20 per cent and productivity is up as well as unemployment being low.”
“This decision is one that is reasonable and it is fair. It means that for low-paid workers like Jordan who is with me, he will have a better ability to pay rent and pay for the groceries and to pay for energy bills as well.”
“The union movement is happy and proud that we have fought for this increase and that it is going to make a big difference for so many workers.”