FWC hands down historic wage decision

Historic wage ruling by Australia's FWC to address cost-of-living pressures for Australia’s lowest paid workers

FWC hands down historic wage decision

Australia’s Fair Work Commission (FWC) handed down an historic wage ruling awarding up to 2.7 million minimum wage earners a 5.2 percent wage rise effective from 1 July. This means that minimum wages will rise by $1.05 per hour (from $20.33 to $21.38).

The move has been welcomed by both Australian Prime Minister Anthony Albanese and Federal Treasurer Jim Chalmers who made statements in support. Today’s pay decision has also appeased the Australian trade union movement’s wage demands even though it slightly fell short of their initial 5.5 percent increase.

The Australian Chamber of Commerce has expressed reservations, cautioning that today’s pay rise could put business owners under additional stress and poses a risk to the stability of the economy.

Today’s FWC ruling means that workers on unskilled awards will see an additional $40 in their pay packets (before tax) and workers on skilled awards will get a 4.6 percent increase.

Fair Work Commission President, Iain Ross, explained that rapidly rising inflation across Australia drove the Commission’s decision for such a big rise. He added that “the present circumstances warrant an approach which gives a greater level of support to the lowest paid” and it will address some of the cost-of-living pressures experienced by minimum wage earners in Australia.

Before today’s decision was handed down, the national minimum wage stood at $20.33 per hour or $772.60 per week and ($40,175 per year). Today’s FWC’s wage ruling means that from 1 July 2022, Australia’s lowest paid workers will receive a pay increase up to $21.38 an hour or $812.60 per week. This represents a pay rise of around $40 per week. Annually, this translates to $42,255 per year for full-time wage earners and is a $2,080 annual pay rise.

These pay rises represent the largest minimum wage increases since 2006 (when a 5.7 percent rise was awarded during Australia’s mining boom). In comparison, in 2021 the FWC increased minimum wages by 2.5 percent.

This wage increase is significant and was welcomed by the Prime Minister, Anthony Albanese – who had made a formal submission to the Fair Work Commission at the beginning of June. The union movement, despite calling for a 5.5 percent increase were similarly impressed by today’s FWC ruling.

Federal Treasurer Jim Chalmers also embraced the ruling saying that this decision “to lift the minimum wage by 5.2 per cent so that Australia’s low-paid workers don’t go backwards” was in accordance with the incoming government’s submission. Welcoming this pay rise, Chalmers also said this will go a long way towards ensuring that the “relative standard of living” for Australia’s lowest paid workers “is not expected to have a material impact on employment.”

Today’s decision will directly affect around 180,000 workers across the following unskilled professions such cleaners, carers and shop assistants, although workers in hospitality, tourism and aviation won’t be eligible for similar pay increases until October this year.  

Australian Council of Trade Union’s (ACTU) secretary Sally McManus also welcomed the ruling even though FWC’s pay increase was slightly lower than the ACTU’s initial bargaining position where they were seeking a 5.5 percent pay rise.

Australian Chamber of Commerce chief executive, Andrew McKellar, did however express his concerns about the move, saying that this increase could post a “very significant risk to the economy” and that it would “add $7.9 billion in costs to affected businesses over the year ahead.”

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