Almost three million Australians will receive a 3.5% pay increase from 1 July due to a decision by the national workplace industrial relations tribunal.
Announcing its National Minimum Wage order, the Fair Work Commission said the surge in inflation that had cut low paid workers' real incomes since 2021 had ended.
“The Reserve Bank of Australia’s assessment that inflation has sustainably returned to its target range of 2–3% indicates that this inflationary episode is now over,” the FWC said in its decision.
A small proportion of the workforce is paid in accordance with the National Minimum Wage. However, 20.7% of all employees are affected because they are paid at minimum wage rates in Australia’s 121 modern industry and occupational awards.
They are disproportionately female, part-time or casual employees working in health care and social assistance, retail trade, and administrative and support services.
Their wages represent about 10.5% of the national ‘wage bill’, which means the decision has limited affect across the workforce.
The FWC said employees reliant on modern award minimum wages or the National Minimum Wage had suffered a reduction in real wages since July 2021 due to a spike in inflation which meant it had deferred action over three annual reviews.
It was concerned that the loss of wages real value would become embedded in the modern award system and the National Minimum Wage if action was not taken.
“We are satisfied that the level of wage increase we have determined is sustainable,” the FWC said.
The labour market remained strong overall and interest rates cuts were likely to lead to higher consumer demand and a higher level of economic growth than in recent times.
“Although business has faced challenging circumstances in recent times, business conditions have remained reasonably healthy, with the level of non-mining profits maintained in real terms and profit margins at approximately their pre-pandemic level,” it said.
