Fair Work Commission increases minimum wage by 3.5%

The full bench of the Fair Work Commission has this morning decided to increase the national minimum wage by 3.5%.

The increase will come into effect on July 1, and follows last year’s 3.3% increase.

From July 1, employees will be entitled to a minimum take-home weekly pay of $719.20, or $18.93 an hour. This represents a weekly increase of $24.30 for approximately 2.3 million Australians. Modern award wages will also be increased by the same amount.

In its decision, the full bench of the Fair Work Commission said it believes the 3.5% increase “will not lead to undue inflationary pressure and is highly unlikely to have any measurable negative impact on employment”.

Instead, the bench said the increase to the minimum wage “will mean an improvement in the real wages for those employees who are reliant on the national minimum wage and modern award minimum wages, and absent any negative tax-transfer effects, an improvement in their living standards”.

“We acknowledge that the compounding effect of increases over time may have a cumulative effect which is not apparent in the short term. We will continue to closely monitor this in future reviews,” said the Commission.

The increase is just under half of what the unions were seeking, which was a 7.2% increase, or a weekly pay increase of $50.

“If the minimum wage is not raised relative to other wages, higher inequality and more prevalent low pay will prevail, and the growth potential of the economy will not be realised,” said the Australian Council of Trade Unions in its earlier submission to the Fair Work Commission’s wage review.

Meanwhile, business groups had been calling for a much smaller increase.

The Australian Chamber of Commerce and Industry and the Australian Retailers Association (ARA) had proposed an increase of 1.9%.

The ARA said this morning it is concerned the 3.5% increase will “stifle jobs growth within the retail sector”, which is already facing an “unsteady trading environment”.

“Monthly retail sales growth is currently around 2%, however, we would like to see this growth increase to 4% to ensure retailers can invest in their business and employ more staff,” said ARA executive director Russell Zimmerman in a statement.

“With retailers already struggling to keep their heads above water, today’s 3.5% minimum wage increase will stifle retail growth and delay staff employment across the sector.”

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