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Minimum wage hike has minimal effect

Adam Zuchetti
Adam Zuchetti
15 November 2017 1 minute readShare
Wage hike

While some commentary had forecast a substantial increase in wage growth, thanks to the July increase in minimum wages, only a slight uptick was recorded in the September quarter.

The Fair Work Commission stunned business owners in June this year by announcing a 3.3 per cent rise in the minimum wage and minimum award rates – well above the current inflation rate of 1.8 per cent, effective from the new financial year.

However, the higher cost to employers of minimum wage earners has failed to deliver a meaningful boost in overall wage growth, which edged up by just 0.5 per cent in the September quarter.

The Australian Bureau of Statistics (ABS), indicated “quarterly wages growth in the range of 0.4 to 0.6 per cent for the last 13 quarters (from the June quarter 2014)”, meaning that the minimum wage rise had virtually no material impact on overall wage growth.

“Annual wages growth increased marginally to 2.0 per cent in the September quarter 2017. The higher wage growth in the September quarter was driven by enterprise agreement increases, end of financial year wage reviews and the Fair Work Commission’s annual minimum wage review,” said ABS chief economist Bruce Hockman.

The bulk of wage growth came from the public sector, which grew by 2.4 per cent over the past year. Private sector wages rose by a more modest 1.9 per cent.

Wage growth was highest in Victoria, Queensland and Tasmania at 2.2 per cent. Unsurprisingly, given its ongoing economic problems, Western Australia recorded the slowest wage growth nationally at 1.3 per cent.

Minimum wage hike has minimal effect
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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