What Does The Minimum Wage Increase Mean For Australia’s Lowest-Paid Workers?

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Australia’s national minimum wage is set to lift by 5.2% from 1 July this year meaning Prime Minister Anthony Albanese has delivered on his election promise to increase the minimum wage.

“At the heart of the election campaign I was asked whether I would welcome the decision by the Fair Work Commission to increase the minimum wage by just $1 and today they have done just that,” Albanese announced this week.

It’s a decision worth celebrating for our minimum wage earners who are long overdue for a pay rise but it also should be taken with a grain of salt because for award wage workers this could actually mean a slight pay cut.

What Is Set To Change?

Australia’s minimum wage earners will now get an extra $40 a week as ruled by the Fair Work Commission. The changes mean Australia’s hourly pay rate for minimum wage earners will increase from $20.33 to $21.38. And the award minimum wages will only increase by 4.6%.

Awards are the minimum standards that an employer of an industry must pay their employees.

“We are conscious that the low-paid are particularly vulnerable in the context of rising inflation,” said Fair Work Commission president Iain Ross. “If we were to accept the submissions of some of the employer bodies and award no increase at all then the real wage reduction would be even more severe.”

Sally McManus is the Secretary of the Australian Council of Trade Unions who said that overall this was a really good outcome and that it was “despite the fact that we had to fight employers who wanted working people to have a really significant pay cut.”

What The Increase Means For Australians Amid Rising Inflation

This is the biggest increase we’ve seen for minimum wages since 1991 and is more than double the 2.5% increase last year. The decision will not only impact over 2.7 million Australians on the national minimum or awards wage but it really hits home of how the days of deliberately low wages from the Liberal-National Party are (hopefully) behind us.

“The truth is that many of those people who are on the minimum wage are the heroes who saw us through the pandemic. These workers deserve more than our thanks they deserve a pay rise and today they’ve got it,” said Prime Minister Anthony Albanese.

Fair Work Commission President Iain Ross pointed out that of the present circumstances AKA not being able to afford lettuce, fuel or electricity at the moment  “warrants an approach which gives a greater level of support to the low paid, while seeking to contain the inflation repressions”.

The new minimum wage is above inflation which is sitting at 5.1% but the Reserve Bank of Australia has predicted inflation is likely to hit 7% by the end of the year.

“It makes a difference to people who are struggling with the cost of living and it justifies our position that we took in making a different submission to the Fair Work Commission that said we did not want people who were on the minimum wage to go backwards,” said Prime Minister Albanese.

Shortcomings Of The Increase

However those in the aviation, tourism, and hospitality sector won’t see a wage increase till October 1. The commission is blaming “exceptional circumstances” like slower recovery from COVID impacts.

“We’re disappointed that the commission is holding back those increases for people in hospitality and aviation to the 1st of October, that’s something we do not believe is necessary given that businesses are recovered,” said Sally McManus.

“Having said that though those increases will make a hell of a difference for working people and that this is because of the Union movement in Australia, thanks for everyone who supported us,” she continued.

Those against the increase include The Australian Chamber of Commerce and Australia Industry Group. They are concerned the increase is a “risk to the economy”and it would add $7.9 billion dollars to employers’ costs.

Some small business owners are worried about being able to pay workers the new wage.

However with cost of living on this rise, it’s a huge win for the 2% of Australian workers on minimum wage.