Australia’s lowest paid workers will get a smaller pay rise this year of three per cent, but the industrial umpire says it will help improve their living standards.
The national minimum wage will rise by $21.60 to $740.80 a week from July 1, the Fair Work Commission announced on Thursday.
President Justice Iain Ross said the commission decided to award a lower increase than last year due to changes in the economic environment, including the recent fall in economic growth and drop in inflation as well as tax-transfer changes.
He said the prevailing economic circumstances provided an opportunity to improve the relative living standards of the low paid, and to enable them to better meet their needs.
“We are satisfied that the level of increase we have decided upon will not lead to any adverse inflationary outcome and nor will it have any measurable negative impact on employment,” he said.
“However, such an increase will mean an improvement in real wages for those employees who are reliant on the NMW and modern award minimum wages and an improvement in their living standards.”
The commission’s decision directly affects 2.2 million low-paid workers and indirectly affects many more.
Justice Ross said the relative living standards of minimum wage and award-reliant employees had improved over recent years.
“Some low-paid households are plainly experiencing significant disadvantage,” he added.
Unions called for a six per cent rise this year or about $43 a week, while business groups wanted it an increase of less than two per cent.
Despite only getting half of what unions sought, ACTU assistant secretary Liam O’Brien said the three per cent increase was significant in terms of closing the gap to the median wage.
“In real terms we are still seeing a significant increase,” he told reporters.
The ACTU still believed the minimum wage should be higher.
“It is not acceptable that workers in this country who work full-time hours are on less than the poverty line.”
The Australian Chamber of Commerce and Industry said it was concerned the increase would put jobs in danger and risk the viability of some small businesses.
ACCI CEO James Pearson said the wage rise would cost employers an additional $3.1 billion a year.
“Australia already has one of the highest minimum wages in the world, and continuously increasing minimum wages by significantly more than inflation has consequences,” he said.
“A third straight increase well in excess of Inflation will be difficult for businesses, particularly small businesses, to absorb.”
Federal Industrial Relations Minister Christian Porter said the FWC decision reflected a real increase above the 1.3 per cent inflation rate and higher than economy-wide wages growth of 2.3 per cent.
“The real increase in minimum wages, combined with the government’s plan to lower taxes for working families, will ease cost of living pressures and lift the living standards of all low-paid workers in Australia,” Mr Porter said.
The three per cent increase is lower than last year’s 3.5 per cent rise and 2017’s 3.3 per cent.