Minimum wage rises 5.2% to $21.38 an hour, giving a boost to 2.7 million Australians as cost of living soars

Australia’s minimum wage will rise by 5.2% to $21.38 an hour, the Fair Work Commission (FWC) has ruled, giving a pay bump to some 2.7 million workers covered by the minimum employment standards.

In a Wednesday morning announcement, the FWC declared it will enshrine a new minimum wage of $812.60 per week, up $40 a week from existing levels.

The decision will lift the minimum wage from $20.33 per hour, or $772.60 based on a 38-hour work week.

For those on modern awards, the minimum wage will rise 4.6%, with a minimum weekly increase of $40 a week.

“In effect, modern award minimum wage rates above $869.60 per week will receive a 4.6 per cent adjustment, wage rates below $869.60 per week will be adjusted by $40 per week,” the FWC said in its decision.

For many workers, those changes will come into play on July 1, 2022.

However, “exceptional circumstances” mean workers covered by modern awards in the aviation, marine tourism, alpine tourism, and hospitality sector will see changes to their pay packets from October 1.

While the minimum wage hike will partially shield minimum wage earners from imminent inflationary pressures, it falls short of the 7% inflation rate projected for the end of 2022 by Reserve Bank of Australia governor Phillip Lowe on ABC’s 7.30 Tuesday night.

Industry groups, unions split on wage hike

The decision was welcomed by organised labour groups, which called on the FWC to enshrine an increase of 5% to ensure the cost of living does not totally run away from minimum wage earners.

Responding to the Wednesday announcement, the Australian Workers’ Union called the 5.2% increase a “massive relief” for minimum wage earners.

The Australian Council of Trade Unions had urged the FWC to lift the minimum wage by 5% in its final submission, which would have lifted it to $21.35 per hour or $811.30 a week.

That submission was wound down from its initial call to bump the rate by 5.5%.

It’s a different story among Australian business groups, many of which called for a more modest increase.

The Australian Chamber of Commerce and Industry advocated for a 3% rise, a change it said would result in weekly pay of $795.78 — a $23.18-a-week hike from previous levels.

The Australian Industry Group called for a more modest 2.5% minimum wage hike, bringing the hourly rate to $791.90 a week.

Labor government welcomes increase

In its final submission to the FWC, the Labor government this month called on the workplace tribunal to ensure “the real wages of Australia’s low-paid workers do not go backwards” given Australia’s inflationary economic environment.

“High and rising inflation and weak wages growth are reducing real wages across the economy and creating cost-of-living pressures for low-paid workers,” the statement read.

“It is critical to ensure that these workers do not bear a disproportionate impact of these challenging conditions.”

Federal Treasurer Jim Chalmers celebrated the Wednesday decision, saying it aligned with Labor’s FWC submission.

I welcome the decision by the Fair Work Commission to lift the minimum wage by 5.2% so that Australia's low-paid workers don't go backwards, in line with the submission lodged by the @AlboMP @AustralianLabor Government. #auspol

— Jim Chalmers MP (@JEChalmers) June 15, 2022

Labor Senator Tony Sheldon, former National Secretary of the Transport Workers’ Union, also hailed the FWC decision Wednesday.

Workers have just been awarded a 5.2 per cent rise in the minimum wage.

This is the difference when you have a Labor government standing up for the rights of all.

— Senator Tony Sheldon (@TonySheldonNSW) June 15, 2022

The FWC announcement also surpassed the 5.1% increase Prime Minister Anthony Albanese called for in this year’s federal election campaign.