Wage Increase on The Horizon

The Fair Work Commission (FWC) has announced a wage increase for both the minimum and award wages by 3.75 per cent, in an announcement made on Monday 3 June.

From 1 July 2024, the new National Minimum Wage will be $24.10 per hour and $915.91 per week, based on a full-time, 38-hour working week. It is an increase of about $33.11 a week to the current minimum wage and will affect about 2.6 million workers. Overall, the FWC estimates the increase to minimum and award wages will affect “about a quarter of all Australian employees”.

“The increase of 3.75 per cent which we have determined is broadly in line with forecast wages growth across the economy in 2024 and will make only a modest contribution to the total amount of wages growth in 2024,” the commission said.

“We consider therefore that this increase is consistent with the forecast return of the inflation rate to below 3 per cent in 2025.”

In delivering its decision, the FWC said living standards, higher living costs and workforce participation were major considerations in determining the increase to the minimum and award wages.

“In determining this level of increase, a primary consideration has been the cost-of-living pressures that modern-award-reliant employees, particularly those who are low-paid and live in low-income households, continue to experience notwithstanding that inflation is considerably lower than it was at the time of last year’s review,” the commission said.

Unions Argue for Higher Increases In Line With Inflation

The Australian Council of Trade Unions (ACTU) had argued for an increase of 5 per cent to the minimum wage, and the federal government had pushed for an increase in line with inflation. However, they have welcomed the 3.75% increase.

“July will be a very positive month for Australian workers. Every working person will have significantly more in their bank accounts because of the Federal Government’s cost-of-living bonus through tax cuts, and for over 20% of the workforce, this 3.75% increase. This means that an entry-level retail or hospo worker will be $2,600 per year better off. A mid-level community sector worker will be $3,260 a year better off, and a forklift driver will be $3,170 better off,” said ACTU Secretary, Sally McManus.

Small Businesses Respond to Wage Increase

Luke Achterstraat, chief executive of the Council of Small Business Organisations Australia (COSBOA), noted that employers are already battling rising costs in a tough economic climate, warning that the wage increase may be passed onto consumers.

“It’s an extremely tough operating environment, the levy is really breaking for small business, energy, rent, insurance, [and] borrowing costs, and as the [Fair Work] commission said, productivity has been flatlining for a number of years now,” he told ABC News Channel.

“Unfortunately, the decision today will mean higher costs and more cost pressure for small businesses who are really struggling to churn out a profit and to remain in business at the moment.

“Small businesses will need to find a way to pass these costs on, that’s the reality.”

ACCI chief executive Andrew McKellar said the decision was “not in line” with economic outcomes, but isn’t a “significant inflation threat so long as productivity is addressed.”

“It is inevitable that businesses will need to pass increased costs through to consumers. Many small businesses are in a position where they simply cannot absorb any more,” said Mr McKellar.

The Australian Commerce of Chamber and Industry (ACCI) had called for a more modest increase around 2%, while the Australian Industry Group (Ai Group) had proposed a 2.8% increase.

Award Employees Also To Receive Increase

The National Minimum Wage increase will also apply to employees covered by an award. An industry-specific award covers most employees, including on-farm staff, administrative employees and employees within the horticultural industry, among others.

The increase of 3.75% will apply from the first full pay period on or after 1 July 2024.

References: Fair Work Australia, ABC, Australian Council of Trade Unions

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