The Fair Work Commission has announced a 2.6% increase in the national minimum wage, which will rise to $622.20 a week, up from $606.40.
The increase is expected to impact on Australia’s 1.5 million lowest paid workers, yet the rise is less than last year. It is also less than the $30 a week increase sought by unions but more than the $5.80 wanted by business groups.
Last year the national minimum wage rose by $17.10 a week.
Fair Work Commission president Justice Iain Ross said there would be a 2.6% increase in the minimum wage, noting a number of considerations led to the decision to award a lower increase than last year.
"While the economic outlook remains favourable, GDP growth is expected to ease to slightly below trend in 2013/14 and the unemployment rate is expected to increase slightly," Justice Ross said.
"Inflation is expected to remain comfortably within the RBA's target range of two to three per cent.
"In addition to these considerations, the superannuation guarantee increase to apply from 1 July this year has also been a moderating factor in our assessment of the adjustment that should be made to minimum wages.
"As a result, although it would not be appropriate to quantify its effect, the increase in minimum wages we have determined in this review is lower than it otherwise would have been in the absence of the superannuation guarantee increase."
He said the commission had also taken into account the effect of the carbon price on inflation figures and the lower than forecast recent inflation outcome.
Justice Ross said while some of the minimum wage rates in modern awards had increased in real terms over the past decade, they had not kept pace with the level of wage increases generally – yet this year the figure falls short of union expectations.
The ACTU had argued for a $30 a week increase to $636.40, saying it would stop a decline in low-paid workers' living standards.
The Australian Chamber of Commerce and Industry (ACCI) labelled the ACTU claim as reckless and called for a weekly rise limited to $5.80, warning of deteriorating conditions for small business.