About 3 million workers on minimum wage in Australia will receive a 4.75% pay rise from July, as announced by the Fair Work Commission. The decision also includes a 6% increase for the country's lowest paid employees, affecting around 100,000 workers, raising their hourly rate from $24.95 to $26.44.
The Commission's 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 are still lower than in mid-2021, before inflation spiked.
Treasurer Jim Chalmers welcomed the ruling, stating it strikes 'a very effective balance' and that decent pay is part of the solution to cost-of-living pressures. The minimum wage has increased by 30% since Labor came to power in May 2022, or 12% after accounting for inflation.
However, business groups warned of the impact on small businesses. David Alexander of the Australian Chamber of Commerce and Industry said the increase 'could be the tipping point for some businesses' unable to pass on higher costs. Economists also cautioned that the wage rise could add to inflationary pressures and potentially lead to another interest rate hike.
The decision affects roughly one in five employees but represents only about 11% of the national wages bill. The Reserve Bank of Australia forecasts inflation will halve to 2.4% by mid-2027.
