Here is what HR needs to know about the minimum wage increase.
A new minimum wage increase has been approved by the Fair Work Commission that sees the lowest paid workers receive an increase of $22 to their weekly pay packets. Announced yesterday, it appears to be a decision that has pleased nobody, with the unions angry that it falls far short of the $45 they were demanding, and employer groups warning that it will impact employment during a sluggish economy.
The 3.3 per cent increase exceeds last year’s award of 2.4 per cent and comes at a time when inflation remains low, sitting at 2.1 per cent in the year to the end of March.
Iain Ross, Commission president, said the decision would affect around 2.3 million workers and dismissed arguments from the Australian Retailers Association that it would stifle job growth and counter the benefits recently won by employers in the cuts to penalty rates for Sunday and holiday working.
“It will mean an improvement in the real wages for those employees who are reliant on the national minimum wage and modern award minimum wages and an improvement in their relative living standards,” said Ross.
The increase was precisely half of what the Australian Council of Trade Unions has been calling for. ACTU secretary, Sally McManus said that “The minimum wage will now be just over $36,000 a year – that’s not enough to support yourself, let alone a partner and a family anywhere in Australia.”
(With today’s news, it appears the minimum wage will be rising by a higher percentage in the next year than most salaries. Read our report.)
Awards and compliance
The minimum wage that an employee is entitled to is set out in one of the 122 industry or occupation awards that cover most jobs in Australia, and are published by the Fair Work Commission. A business can obviously employ people who fit into different award categories, such as a construction company that employs builders but also office administration staff.
Where awards don’t apply is when a business has an enterprise agreement and the employees are covered by that.
How do we compare?
According to the World Economic Forum, Australia has the most generous minimum wage scale compared to the rest of the world, closely followed by Luxembourg. Mexico sits at the bottom of the table. Here are some comparisons.
- Australia: $18.29 an hour
- New Zealand: A$15.05
- Germany A13.31
- UK: A$13 an hour
- Japan A$10 on average (varies from region to region)
- US A$9.67 is the federal set rate, however minimum wage varies from region to region. In California it is A$14 whereas in New York state is is $20
As an ownwe of a small retail business in an area that actually saw a 4% decrease in CPI this year, I feel the frustration of seeing all sides and agree at this point a fair decision is not one that makes anyone happy. We have a decrease in our revenue and an increase in our expenses. Our policy used to be to pay above award rates to our staff, however this is now no longer financially viable. Operating in a regional area, we are also feeling the increasing community pressure of increasing our opening hours to include Sunday trade,… Read more »
This pay increase is ridiculous in the current economic climate, especially when we already have the world’s most generous minimum wage. We simply cannot afford this. The reason why the cost of living is so high is because we lived beyond our means during the boom years and cannot wind back our pampered style of living, combined with Federal ALP and State Governments having squandered our savings and amassed a debt that is now unsalvageable. Any politician who attempts to reign in spending and reduce the welfare budget is pilloried (look at what happened to Abbott). More than one half… Read more »