Employers will have to pay higher wages to workers on award wages and the National Minimum Wage (NMW), following a review by the Fair Work Commission.
As of 1 July 2023, award wages will increase by 5.75%, while the NMW – which applies to employees who aren’t covered by an award or registered agreement – will increase by 8.6%, from $21.38 to $23.23 per hour.
Treasurer Jim Chalmers called this “a huge win” for Australia’s lowest-paid workers.
“People on low and modest wages have the least capacity to deal with rising cost of living. That’s why the government argued for a decent pay rise for these workers, and the government welcomes the decision from the independent Fair Work Commission,” he said.
“W believe the best way to ensure workers can deal with cost‑of‑living pressures is to ensure they earn enough to provide for their loved ones and get ahead.”
Will the wage rise be inflationary?
The Treasurer’s reference to high inflation was, ironically, one of the arguments against giving such a large raise to Australians on the award and minimum wages.
Inflation was 7.0% in the March quarter, according to the most recent quarterly data from the Australian Bureau of Statistics, and some people argue that it will be hard to crush inflation unless wages are restrained.
Employer association criticises decision
CEO of employer association Australian Industry Group, Innes Willox, called the wage decision “disappointing”.
Mr Willox recognised the “competing tensions” between addressing cost-of-living pressures on the one hand and forcing businesses to deal with a large wage increase in a weakening economy on the other.
“Nevertheless, at a time when the economy and the labour market are clearly under growing pressures and when productivity growth has flatlined, it is a decision that adds to the risks of an inflation blowout; is likely to see interest rates rise further than they would have otherwise; and raises the likelihood that households will face further cost-of-living pressures,” he said.
