Australia's Fair Work Commission has announced a 4.75% increase in the minimum wage, affecting about 2.7 million workers on award wages, while the lowest paid 100,000 employees will receive a 6% rise. The decision, effective from July, lifts the hourly rate for the lowest paid from $24.95 to $26.44, bringing the weekly wage for a 38-hour week from $948 to nearly $1,005.
Commission President Adam Hatcher described the decision as 'particularly challenging' due to the Middle East conflict causing a global oil shock and rising fuel costs. He noted that wage rates for most award employees remain lower than mid-2021 levels, and that a wage increase of over 5% is needed to close the real wage gap. The Reserve Bank of Australia forecasts inflation at 4.8% by June, nearly double its target.
Treasurer Jim Chalmers welcomed the ruling, stating it 'strikes a very effective balance' and that decent pay is part of the solution. He highlighted that the minimum wage has risen by 30% since Labor came to power in May 2022, or 12% after accounting for inflation. The decision affects one in five employees but only 11% of the national wages bill.
However, employer groups expressed concern. David Alexander of the Australian Chamber of Commerce and Industry warned the increase could be 'the tipping point for some businesses,' particularly in retail, hospitality, and accommodation. ACTU Secretary Sally McManus countered that workers are also customers, and cutting their pay would reduce spending.
Economists warned of potential inflationary effects. AMP's My Bui said the decision could add 0.6 percentage points to wages growth and lead to larger pay claims, potentially prompting another rate hike. She now forecasts a peak cash rate of 4.85% in November, with a risk of an earlier increase in June.
