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Fair Work Commission announces 5.2% wage increase

The Fair Work Commission (FWC) has raised the national minimum wage by 5.2%, with Australia’s lowest paid workers set to receive a $40 a week pay raise from 1 July.

15 June 2022 

The minimum wage will be lifted $1.05 an hour from its $20.33 base from July 1, an increase of 5.2%, to $21.38 an hour. It is equivalent to a pay raise of $40 a week and takes the weekly minimum wage to $812.60.

Minimum wages in modern awards will be increased by either:

  • $40 per week (where the current minimum wage is $869.60 per week or less) or 
  • 4.6% (where the current minimum wage is greater than $869.60 per week).

The increases will be delayed for the awards in the aviation, tourism, and hospitality industries until October 1.

For more details on the decision and how it affects your business click here.

Fair Work Commission president Iain Ross said economic conditions and the rising cost of inflation were putting too much pressure on low-paid workers to ignore.

“We have concluded that the changes in the economic context are in favour of an increase in the national minimum wages,” Fair Work Commission president Iain Ross said.

"Given the current strength of the labour market, the adjustments we propose to make will not have a significant adverse effect on the performance and competitiveness of the national economy."

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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.

 

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