Australia’s lowest paid workers will get a $21.60 a week pay rise, which is less than last year but more than employer groups had argued for.
The national minimum wage will rise by three per cent to $740.80 a week from July 1, the Fair Work Commission announced on Thursday.
Unions had been calling for a six per cent rise, about $43 a week, while business groups were banking on a more modest increase of up to two per cent.
“We have decided to award a lower increase this year than that awarded last year,” commission president Justice Iain Ross said.
While noting a recent slowing in quarterly gross domestic product growth, the economy had been performing moderately well and employment was expanding, while inflation was subdued.
“We are satisfied that the level of increase we have decided upon will not lead to any adverse inflationary outcome and nor will it have any measurable negative impact on employment,” Justice Ross said.
“However, such an increase will mean an improvement in real wages for those employees who are reliant on the NMW and modern award minimum wages and an improvement in their living standards.”
The commission’s decision directly affects 2.2 million low paid workers and indirectly affects many more.
The national minimum wage currently stands at $719.20 a week after the commission last year agreed to a 3.5 per cent increase equating to $24.30 per week.
But employer groups were disappointed with the latest decision with the Australian Chamber of Commerce and Industry saying the “above inflation” increase puts jobs at risk and threatens small businesses.
“It will cost Australian employers an additional $3.1 billion per year,” ACCI CEO James Pearson said in a statement.
“Australia already has one of the highest minimum wages in the world, and continuously increasing minimum wages by significantly more than inflation has consequences.”
However, the federal government applauded the commission decision which it said would help ease cost of living pressures.
“The real increase in minimum wages … combined with the government’s plan to lower taxes for working families will ease cost of living pressures and lift the living standards of all low-paid workers in Australia,” Industrial Relations Minister Christian Porter said.
The commission also noted women were still disproportionately represented amongst workers on the minimum wage.
“An increase in the NMW and modern award minimum wages will assist in reducing the gender pay gap,” the commission’s decision said.