“Significant disadvantage”: Minimum wage to increase 3% as umpire concedes some workers are doing it tough

Australia’s lowest-paid workers will receive a 3% pay rise from July 1 after the Fair Work Commission (FWC) this morning decided to hand down a real increase to the minimum wage.

Delivering its annual wage review decision on Thursday morning, FWC president Iain Ross said conditions for Australia’s 2.2 million minimum wage workers had improved in recent years, but many were still struggling to make ends meet.

“Some low-paid households are plainly experiencing significant disadvantage,” he said.

“The current economic circumstances provide a further opportunity to improve the relative  living standards of the low paid.”

This year’s increase is smaller than the 3.5% handed down last year but is still higher than the at-inflation increase employer groups were pushing for.

The national minimum wage will increase from $719.20 per week or $18.93 an hour to $740.80 per week or $19.49 an hour.

Ross said the commission was satisfied the $21.60 a week increase would not have a negative effect on employment.

“We have decided to award a lower increase this year then that awarded last year having regard to the changes in the economic environment, in particular, the recent fall in GDP growth and the drop in inflation,” he said.

The commission has also decided to increase minimum wages in all modern awards by 3%, rounded to the nearest 10 cents.

What this translates to in dollar figures varies, but the commission said a C10 tradesperson’s modern award minimum wage rate would increase by $25.10 per week.

The changes come into effect from the start of the first full pay period after July 1, 2019.

The 3.0% minimum wage increase has few implications for aggregate wages growth
More important is growing the economy faster & getting unemployment rate towards 4% – neither of which are on the cards in the near term.
When this happens, one day, the minimum wage will rise by more.

— Stephen Koukoulas (@TheKouk) May 30, 2019

In deciding on a 3% increase to the national minimum wage, the commission has struck close to the halfway point between what unions and employer groups were asking for.

As usual, interest groups are unhappy with the minimum wage decision

The Australian Council of Trade Unions (ACTU) was seeking a 6% increase this year and a 5.5% boost next year, arguing the minimum wage should be brought to 60% of median earnings.

Ross acknowledged some low-paid award-reliant households were sitting below the relative poverty line.

“A number of low-paid employee households are also likely to have disposable incomes that do not reach the threshold of the relevant Minimum Income for Healthy Living budget standard,” he said.

The Australian Chamber of Commerce and Industry (ACCI) and the Australian Retailers Association (ARA) had argued for a 1.8% increase, in line with inflation.

Restaurant and Catering Australia wanted a wage freeze, which would have meant a cut to real wages.

ACCI chief executive James Pearson said the FWC’s decision puts small business and job seekers at risk.

“The health of our labour market is relatively strong. However, parts of the country and some industry sectors are finding the going tough,” Pearson said in a statement circulated on Thursday morning.

“Employers respect the independent decisions of the Fair Work Commission, but a third straight increase well in excess of inflation will be difficult for businesses, particularly small businesses, to absorb.

Ross said no parties had identified any data demonstrating adverse employment effects from their last two minimum wage increases.

Today’s decision on the minimum wage doesn’t go far enough. Our research shows that just 2% of rentals are affordable for people on the minimum wage — housing costs must be part of these decisions #auspol

— Anglicare Australia (@anglicare_aust) May 30, 2019

Council of Small Business Organisations Australia (COSBOA) chief executive Peter Strong says small businesses will need to absorb the increases by cutting staff hours.

“We understand that people on low wages want more money, of course they do. They are now consistently receiving pay rises above inflation and are better off as a result,” Strong tells SmartCompany.

“We also know that the people who have to pay this increase are, in the main, small-business employers.”

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