The FWC decision statement said: “Headline inflation is now expected to peak at around 6% in the second half of this year, partly driven by higher petrol prices and sharp increases in the cost of new dwellings.
“The sharp rise in inflation impacts business and workers. The cost of business inputs increases which, depending on the capacity to pass on those costs, adversely impacts profitability. Inflation erodes the real value of workers’ wages and reduces their living standards. The low-paid are particularly vulnerable in the context of rising inflation."
Australian Chamber of Commerce and Industry CEO Andrew McKellar said the increase represented a “very significant risk to the economy.”
“It veers very much towards the upper end of the range of the possible outcomes that we could have expected to have seen today,” he said.
“In particular, it adds very significant costs to the Australian economy and to businesses. By our calculations, this will add $7.9 billion in costs to affected businesses over the year ahead.”
“It comes at a time when inflation is emerging as one of the most urgent challenges facing the Australian economy. And if we are to address that, if we are to remain competitive, then, clearly, this is not a decision that will help in those circumstances.”
Treasurer Jim Chalmers said on social media he welcomed the decision “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 government”.
For a detailed analysis of the decision, read our workplace relations circular.