Millions of Australians will receive a substantial boost to their pay packets after the Fair Work Commission hand down its annual minimum wage decision.
The minimum wage will rise by 5.2 per cent, slightly above the current inflation rate of 5.1 per cent.
That will take the minimum hourly rate from $20.33 to $21.38.
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The weekly minimum wage will rise by $40 to $812.60.
The minimum wage for employees on modern awards will increase by 4.6 per cent.
Unions had been pushing for a 5.5 per cent increase while business groups called for a rise of between 2.5 per cent and 3 per cent.
The new pay rates will come into effect on July 1 except for the tourism, hospitality and aviation sectors where it will take effect in October.
Fair Work President Iain Ross says the Commission has taken into account the significant change in economic conditions since last year.
“The most significant changes since last year’s review decision have been a sharp increase in the cost of living and the strengthening of the labour market,” Justice Ross said.
“At the aggregate level, labour market performance has been particularly strong The unemployment rate has fallen to 3.9 per cent compared to 5.5 per cent in April 2021 at the time of the last review.
“The improvement in the labour market is forecast to continue in the period ahead. There has also been a sharp rise in the cost of living since last year’s review.”
ACTU Secretary Sally McManus says the increase in the minimum wage is ‘fair and reasonable’.
“We’re really happy with this outcome. We think it’s going to make a significant difference to the pressures that low-paid workers are under with the cost of living rising,” Ms McManus said.
“Whilst it’s not exactly what we wanted, we welcome this increase because we know that it’s actually going to make a big difference to 25 per cent of the workforce.
“We’re talking about millions of people and their families that will have a better chance of being able to afford the groceries, afford their petrol and their energy bills.”
However, business groups warn the increase poses a risk to the economy and could send many businesses to the wall.
“This adds very significant costs to the Australian economy and to business. By our calculations, this will add $7.9 billion in costs to the affected businesses over the year ahead,” Australian Chamber of Commerce and Industry CEO Andrew McKellar said.
“So that will be a very considerable burden that those businesses will either have to take to the bottom line or pass on to their customers.
“It comes at a time when inflation is emerging as one of the most urgent challenges facing the Australian economy and if we are to address that, if we are to remain competitive, then clearly this is not a decision that will help in those circumstances.”