Jun 17th, 2022
The Fair Work Commission (FWC) announced on Wednesday that the National Minimum Wage will increase by 5.2 per cent on 1 July, 2022. This raises the minimum wage from $20.33 to $21.38 per hour, or $812.60 per week. For individuals covered under a modern award, minimum rates of pay will increase by either 4.6 per cent or $40 per week, whichever is greater.
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Functionally, this means that weekly award minimum rates greater than $869.90 will receive a 4.6 per cent increase, while those below $869.90 will get a $40 per week increase.
In their decision, the FWC considered the high inflation and rising cost of living impacting the real value of the minimum wage. The FWC pointed out that while inflation is at 5.1 per cent, the rate of inflation for certain non-discretionary products is higher and this will likely impact low-income workers the most. If the FWC were to award a lower increase, or no increase, in the minimum wage, this would result in significant real wage reductions for award-reliant workers. The wage increase is intended to alleviate some of the cost pressures faced by the lowest paid, most vulnerable workers in the community. The FWC concluded that the 5.2 per cent increase would not adversely affect the economy, citing the strong labour market which currently has low rates of unemployment and falling underemployment.
The decision has been welcomed by many groups, including the Australian Council of Trade Unions (ACTU), who had proposed an increase of 5.5 per cent. However, ACTU secretary Sally McManus noted that the changes only apply to 1 in 4 Australian workers, and that more substantial changes to collective bargaining laws are needed to support other workers’ wages across the country.
Prime minister Anthony Albanese was also pleased with the change, as he had advocated for an increase that would align with the inflation rate of 5.1 per cent.
The Australian Chamber of Commerce and Industry, who had proposed a more modest increase of 3%, expressed concern that the decision would place additional pressure on businesses, who face increasing operation costs and may raise consumer prices to stay afloat.
While the minimum wage increase will apply from the first full pay period commencing on or after 1 July, the FWC ruled that certain awards in the aviation, tourism and hospitality industries will only receive these changes from 1 October, due to exceptional circumstances posed by the pandemic.