The minimum wage is increasing: Here's what that means for you

The national minimum wage will increase by 1.75% or $13 a week for 2.2 million award-reliant workers, the Fair Work Commission (FWC) ruled on Friday.

But in an unprecedented step taken due to the COVID-19 pandemic, the FWC moved to stagger the increase across different industries, with some firms set to pay the increase from July 1 and others granted a reprieve until next February.

The increase will see wages for Australia’s lowest-paid workers increase to $753.80 per week, or $19.84 per hour, following last year’s 3% increase to $740.80 a week, or $19.49 an hour.

Workers under awards deemed less affected by the pandemic — so called “Group 1 Awards” — will have their pay increased from July 1, while workers in “Group 2 Awards” will fall under the wage increase from November 1.

Workers under retail, fast food, restaurant and hospitality awards will fall under “Group 3”, and will receive their wage increase from February 1 next year, just four months before the FWC is due to make its 2021-22 minimum wage decision.

See below for a full list of which awards fall under what category and when the increase will apply by.

Ross: FWC made decision “with caution”

Business lobbyists had argued for a freeze in the minimum wage this year as firms deal with the fallout from the COVID-19 pandemic, which is likely to throw Australia into its first recession in almost 30 years.

The Australian Council of Trade Unions (ACTU) had called for a $30 a week bump, arguing low-paid workers continue to struggle to make ends meet amid the coronavirus crisis.

In a surprising turn, the FWC’s decision was split, with panel member professor Mark Wooden recommending a wage freeze.

Commission president Iain Ross said the majority of the panel accepted that economic considerations weighed in favour of greater moderation in wage increases, with more weight being given to the impact on hiring and reemployment.

However, he said the FWC was also required to take into account the relative living standards and needs of the low paid.

“An increase in minimum wages would assist these [minimum wage] employees to better meet their needs, if we were to award no increase it would amount to a real wage cut,” Ross said.

“For some households, it would lead to further disadvantage and may place them at a greater risk of moving into poverty.”

Ross said the FWC nevertheless approached their decision this year with caution, and the tranched nature of the wage increase would help moderate the impact on employers suffering the most as a result of the coronavirus outbreak.

This year’s minimum wage decision was particularly contentious due to the pandemic, but also because the federal government is currently undertaking wide-ranging industrial relations consultations with unions and employer groups.

No surprises: Neither employers or unions happy

Reactions to the decision followed the usual lines, with both employer groups and unions expressing disappointment at the level of the increase (either too high or too low) while also outlining their relief the bump was not more or less.

ACTU secretary Sally McManus said the increase was “very modest” but nevertheless outlined the importance of wage growth to Australia’s economic recovery.

“This is a very modest increase and it is disappointing that several awards will not see any increase until November or February,” McManus said in a statement.

“However it is clear in the decision that this panel of experts recognise that cutting wages in the middle of this crisis would be a disaster for working people and the economy and they have rejected the arguments put by some employers to effectively cut wages by freezing the minimum wage.”

Australian Chamber of Commerce and Industry chief executive James Pearson, who had called for a wage freeze alongside other employer groups, said the FWC’s decision “defies common sense”.

“When it’s time for businesses to move off JobKeeper, we risk there being less jobs because of this decision,” he said in a statement.

“It equates to an increase of $13 per minimum wage worker per week, but compound that by the number of employees and weeks per year and the cost is a staggering $1.4 billion to Australian businesses. That money could have been spent on saving jobs or hiring new people.”