The Fair Work Commission has done its bit for Australian wage growth with a 2.5% jump in the national minimum wage – just as the Reserve Bank had hoped.
The Commission’s decision came in the face of strong opposition from employer groups and indifference from the Federal Government which refused to ask for a big increase.
As a result of the decision the base minimum wage will be $772 a week or $20.33 an hour. The previous minimum wage was $753.80 a week, but will now increase by $18.80 a week.
That was after 2020’s 1.75% rise – trimmed by the Fair Work Commission because of the threat to the economy and jobs from the pandemic.
Up to 2.5 million people are paid minimum wages, with about 180,000 on the absolute minimum of $19.84 an hour and more than 2 million on industry minimums, which are higher.
It will come into effect from next month for most industries but be delayed until September for retail and November for aviation and tourism because they have suffered (and continue to suffer) greater damage from the coronavirus.
In other words, a fair proportion of Australia’s lowest paid workers will not see the increase for months.
Fair Work Commission President Iain Ross cautioned that the threat of future outbreaks and the pace of the vaccine rollout presented risks to the economy.
However, he said, “the broad consensus is that the performance of the economy has exceeded expectations and the economic recovery is well underway”.
Unions had asked for a 3.5% rise starting next month while industry groups wanted no more than 1.1% with delayed starting times for some industries such as tourism that had seen their business reduced more than most because of the coronavirus.
The RBA wants wages to rise to push up inflation back into the 2% to 3% on a sustainable basis. The central bank says that will require a jobless rate in the low 4% range and wages growing by more than 3%.
Plenty of employers – especially in hospitality and accommodation will complain about the higher wage decision, but they will have to meet the cost and more because they are also the sectors moaning most about a shortage of workers.