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By Sanaya Jindal
June 2, 2023
In a significant move, the Fair Work Commission has announced a long-awaited pay rise for millions of Australian workers in its annual wage review. The changes, unveiled at a meeting on Thursday morning, will impact both the minimum wage and award rates, bringing relief to many struggling employees.
Award-reliant workers will see a substantial 5.75 percent increase, raising their hourly rate from $21.38 to $22.60, and their weekly rate from $812.60 to $859.33. Meanwhile, workers on the national minimum wage will receive a record-breaking 8.6 percent pay rise due to a change in the alignment between the national minimum wage rate and the C14 award rate. This adjustment will elevate their weekly wages by $70, from $812.60 to $882.90, and their hourly rate from $21.38 to $23.23.
Effective from July 1 of this year, the pay increase will positively impact approximately 200,000 people who fall under the minimum wage changes, with approximately 2.3 million Australians affected by the adjustments to the award rate.
While concerns have been raised regarding the potential impact on inflation, Fair Work Commission President Adam Hatcher expressed confidence that the pay increase would not lead to a wage price spiral. Hatcher emphasized that while a quarter of the working population would be directly affected by the decision, the broader economic consequences of the annual wage review were limited.
"The total wages cost of the modern award-reliant workforce constitutes about 11 percent of the national wage bill," stated Hatcher. He further highlighted that the wage increases awarded in last year's end-of-wage review decision accounted for less than 10 percent of the total wages growth in 2022.
The Commission's decision, which sits at 5.75 percent, falls midway between the demands of unions and employer groups. The Australian Council of Trade Unions (ACTU) had called for a seven percent increase, while the peak business lobby advocated for a 3.8 percent rise.
National employer groups, including the Australian Chamber of Commerce and Industry, criticized the wage increases as being too substantial. Chief Executive Andrew McKellar argued that the changes would pose a significant burden to small and family businesses, estimating a staggering $12.6 billion wages bill for the 260,000 affected businesses across the country.
In contrast, the Australian Council of Trade Unions' Sally McManus welcomed the decision, acknowledging the positive impact it would have on workers. McManus stated that the pay rise would alleviate the need for individuals to make difficult budgetary decisions, such as cutting back on meals or essential expenses.
Over the past few years, workers' salaries have failed to keep pace with inflation, resulting in a decline in real terms. Additionally, increasing interest rates have added pressure to Australian households. The Reserve Bank of Australia has raised rates 11 times since May 2022, with the aim of curbing inflation, which currently stands at 6.8 percent.
The Fair Work Commission thoroughly considered input from various stakeholders during the decision-making process, including industry chambers, trade unions, employer organizations, individual employers and employees, as well as federal and state governments. With 121 modern awards and a small number of modern enterprise awards in place, these changes will impact employees across various industries and occupations.
The pay rise announced by the Fair Work Commission signifies a step toward improving the financial well-being of Australian workers and is expected to provide some relief amid challenging economic conditions.
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