Fair Work Commission lifts minimum wage by 4.75 per cent

The Fair Work Commission has approved a pay rise of 4.75 per cent for millions of Australians in a move welcomed by unions, but sparked warnings from employer groups that the decision could fuel further inflation.

The fair work arbiter on Tuesday morning handed down its annual wage review decision in Sydney, delivering a 4.75 per cent increase for about 3 million Australians on award wages, and an even higher increase of 6 per cent for the 100,000 workers on minimum wages.

From July 1, the national minimum wage will hit $1004.90 a week, or $26.44 an hour, up from $948 a week and $24.95 an hour last year. The increase takes the minimum annual wage, based on a 38-hour working week, to above $50,000 a year for the first time.

The increase falls slightly short of the 5 to 6 per cent wage rise sought by unions and keeps workers worse off than they were before the pandemic when accounting for inflation. However, it is substantially higher than the 3.5 to 3.9 per cent increase proposed by major employer and business groups during the consultation process.

One in five Australian employees are on award wages and of those, two-thirds work in sectors including accommodation and food services, healthcare and social assistance, retail trade and administrative and support services. More than 60 per cent are female and most work on a part-time or casual basis, meaning the wages paid to award workers comprise about 11 per cent of the national wage bill.

In its decision, the Fair Work Commission acknowledged many employees were still worse off in “real terms” because of inflation outpacing wage growth since the pandemic. However, the commission said it would not be “practicable or responsible in the current uncertain circumstances” to deliver a wage increase that would fully compensate workers for their wages falling short of price pressures over the past few years.

Instead, the workplace arbiter said the wage increase should ensure modern award-reliant employees were not worse off in real terms than they were at July 1 last year, and that it took additional measures to protect those who were the lowest paid by giving them a pay boost of 6 per cent.

“The determination of this year’s review outcome has been particularly challenging because of the unusual degree of complexity in the interaction of the matters we are required to take into account,” the commission said in considering balancing the needs of low-paid workers, the need to achieve gender equality and the national economy’s performance and competitiveness.

The commission underscored wider economic challen