2-6-2023 (SYDNEY) In response to the growing financial pressures faced by families grappling with rising living costs, Australia’s independent wage-setting body announced on Friday (Jun 2) that it would raise the minimum wage by 5.75 per cent starting from July 1. This decision by the Fair Work Commission will impact over 2 million workers across the country.
From July 1, the lowest-paid employees will receive A$22.61 (US$15.34) per hour, based on Reuters calculations using the current rate of A$21.38. The Commission stated in a release that the determined wage increase is the maximum amount that can be reasonably justified given the current economic circumstances. The decision takes into consideration the impact of inflation on the financial well-being of modern award-reliant employees, particularly those with lower wages, and aims to help meet their basic financial needs.
However, some economists have expressed concerns that a significant wage increase could set a precedent for other wage expectations and potentially complicate the Reserve Bank of Australia’s efforts to bring inflation back within the target range of 2-3 per cent.
Notably, aggregate wage growth has been below initial forecasts, despite reaching a decade-high of 3.7 per cent in the last quarter. Governor Philip Lowe has cautioned about the upside risks to wages resulting from weak productivity growth rather than nominal wage increases.
