The Fair Work Commission (FWC) has announced an increase of 2.4 per cent in the national minimum wage (NMW) rate to $672.70 a week, a decision that will affect the over 1.86 million Australian employees reliant upon minimum rates of pay.
The rate, which is the equivalent of $17.70 an hour, is a raise of $15.80 per week or 40¢ an hour, and will also apply to modern award minimum wages.
The FWC cited the reasonable health of the economy in making its decision. Real GDP growth over the year to the December quarter of 2015 was three per cent, in comparison to the 2.2 per cent real GDP growth for the corresponding period in 2014. Unemployment fell from 6.1 per cent in April 2015 to 5.7 per cent in April 2016, with corresponding falls in underemployment, long-term and youth unemployment.
Measures of inflation and wages growth were at historically low levels, while company gross operating profit grew 2.8 per cent to the December quarter 2015, which was above the five-year average. The commission said that wages growth was neither a source of inflationary pressure, nor a source of declining capacity for Australian firms to compete in international markets.
“The prevailing economic circumstances provide an opportunity to improve the relative living standards of the low-paid and enable to better meet their needs,” FWC President Justice Iain Ross said in a statement.
The verdict of the FWC takes into account not only economic factors, but a variety of social and other considerations. The commission noted that women continue to be over-represented among the award reliant and the low-paid.
The Australian Retailers Association (ARA) advocated for an increase in the NMW of no more than $7.90 per week and said that the change had left them worried for the future of retailers.
“Retailers and young Australians have been reliant on pay rates to enable retail to bring on low-skilled young staff and increase their skill levels, reducing youth unemployment,” ARA Executive Director Russell Zimmerman said. “Many small to medium enterprise retailers are reliant on a minimum wage workforce and the announcement today to increase wages during this time of low consumer confidence and low growth will sadly result in further job losses and business closures – a very distressing truth for retailers.”
Australian Council of Trade Unions Secretary Dave Oliver said that the increase was not enough.
“Unions argued for a $30 a week increase in the minimum wage for 1.86 million Australian workers, it’s only through our actions that the wage was lifted at all,” he said. “However, we are disappointed in the missed opportunity to truly narrow the gap between the minimum wage and average earnings – now would have been the ideal time to lift the minimum wage.”
The changes to the national minimum wage will come into effect from July 1, 2016.