Hospo Award Workers Are Worse Off Than Last Year Despite Minimum Wage Increase

"We are conscious that the low paid are particularly vulnerable in the context of rising inflation."

wage increase

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The Fair Work Commission has announced its decision to increase minimum wage by 5.2 percent amid rising inflation, but for award wage workers, this actually means a slight pay cut.

Fair Work announced its decision — which it says will impact more that 2.7 million workers directly, as well as other employees on enterprise agreements — on Wednesday morning, increasing the national minimum wage to $812.60 per week.

“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.”

The 5.2 percent rise is 0.1 percent higher than the minimum 5.1 percent increase in line with inflation that Prime Minister Anthony Albanese campaigned for.

While people living on the national minimum wage will enjoy the full 5.2 percent, those on award rates will go up by 4.6 percent, with a minimum increase of $40 per week for those on award rates below $869.60 per week. In real terms, this is a wage cut for award wage workers, on account of the fact that the current inflation rate currently sits at 5.1 percent.

Awards in aviation, tourism, and hospitality won’t be required to increase wages until October 1, on account of “exceptional circumstances” (the pandemic), while all other modern awards will have to bump up wages from July 1. For young people working in hospitality, this means essentially copping a nasty pay cut until October, when you’ll finally get an increase that still leaves you worse off than last year.

Inflation Is Only Predicted To Keep Rising

To make matters worse, Reserve Bank Governor Philip Lowe warned on Tuesday night that he is predicting inflation to hit 7 percent by the end of the year.

“That’s a very high number and we need to be able to chart a course back to 2-3 percent,” Lowe told ABC’s 7.30 last night. “I’m confident we can do that but it’s going to take time. With inflation being as high as it is, and with interest rates as low as they are, we thought it was important to take a decisive step to normalise monetary conditions, and we did that at the last meeting.”

The ACTU Is “Very Happy” With The Outcome

Australian Council of Trade Unions Secretary Sally McManus said she was “very happy” with Fair Work’s decision but noted that more widespread wage increases are needed as businesses enjoy increased profits.

“We think it is going to make a significant difference to the pressures that low-paid workers are under with cost of living rising,” said McManus in a statement.

“This Annual Wage Review is one tool we have to generate wage growth, but it only affects one in four workers – we need wage growth across the economy. It is not acceptable that working Australians and their families continue to go backwards while big business does so well.”

Young People Are, Once Again, Ignored

According to the National Union of Students President Georgie Beatty, the increase in minimum wage — and the discussion around it — has once again ignored young people, who are often working in low paying casual jobs.

“Two thirds of students are in poverty — the minimum wage discussion affects students the most. We are the ones working in these low pay, highly casualised, insecure workplaces just trying to survive while trying to finish our degrees,” Beatty told Junkee.

“The minimum wage discussion is excluding the systemic issues that most affects young people, such as the 57 percent of young people under the age of 21 that are subject to youth wages — who aren’t even guaranteed the dignity of a living wage.”

Politicians Are Getting 2.75 Percent

The Independent Remuneration Tribunal has also decided that Federal MPs, judges, and senior public servants will also get a pay rise of 2.75 percent from next month. The news comes after a pay freeze took effect in July 2020 — keeping politicians salaries unchanged during COVID.

If you account for inflation, this is technically a pay cut, but it simply must be stressed that these salaries are incomparable to the average Australian. Base salaries for Federal MPs will now sit at $217,060, excluding all of the additional allowances they are given, while Anthony Albanese earns $564,000 per annum plus allowances.

According to the income calculator developed by UNSW and the Australian Council of Social Service, even the lowest paid federal politicians will earn more than 96 percent more than male, and 98 percent more than female Australians aged over 15.

So while they’re technically copping a slight pay cut due to inflation, it is not materially impacting them in the same way it impacts the average Australian resident.