Minimum wage to rise $13 a week

by | Jun 24, 2020

The Fair Work Commission (FWC) has ordered a $13 a week increase for Australia’s minimum wage earners, or an increase of 1.75 per cent according to a recent report by The Guardian.

The new minimum wage will now be $753.80 a week or $19.84 an hour and will result in a pay rise for over 2.2 million Australians on minimum wages or have pay set by awards that rise in line with the decision.

However, the increase will be staggered with essential workers to benefit immediately, but industries hardest hit by COVID-19 will have to wait until February 1, according to the report.

Frontline healthcare, social assistance, teachers and childcare workers will receive the increase from July 1, construction, manufacturing and other industries from September 1, while accommodation, food services, arts, recreation, aviation, retail and tourism from February 1, according to the report.

The commission’s president, Justice Iain Ross, said the minimum wage panel had to weigh “sharply polarised” demands.

It is believed unions had asked for a four per cent rise, or $30 a week more, while peak employer bodies – including the Australian Chamber of Commerce and Industry and Australian Industry Group – wanted a freeze or to delay the pay rise until January 1, while the Federal Government had stressed the need to protect jobs and consider business viability.

The decision, in the midst of the COVID-19 contraction, breaks a line of above-inflation pay rises, including a three per cent rise last year, while inflation was 2.2 per cent in the March quarter.

Justice Ross said the FWC understood the economy was in a “significant downturn” and the shock to the labour market had been “unprecedented”, citing the substantial increase in unemployment and underemployment.

The FWC had taken a “cautious approach” to both the timing and size of the minimum wage rise due to the economic environment and tax and transfer changes – such as JobKeeper and JobSeeker schemes – which benefit low-income households, according to The Guardian.

There were “some indications the economy is beginning to recover” but there were “significant downside risks” including that of a second wave of infections and “the future of domestic support” such as the JobKeeper wage subsidy.

Justice Ross said the shock to the labour market meant the panel gave greater weight to the potential that minimum wages could inhibit hiring and re-employment.

The union request for a four per cent rise would create the risk of “disemployment”, particularly for young workers.

He said low-income households would be “less able to meet their needs” and would be at greater risk of poverty without a pay rise. The FWC had taken a more “nuanced approach” on the timing of pay rises than employer calls to delay all rises until 2021. The staggering of pay rises was based on restrictions to contain COVID-19, and data about those sectors experiencing the biggest job losses and pay declines, according to the report.

Justice Ross pointed out in the report that about 25 per cent of award-reliant workers would benefit in the first tranche from July 1, with 40 per cent of workers in the second tranche and more than one-third in the final tranche.

Justice Ross said Professor Mark Wooden, appointed to the FWC panel in March by the attorney general, Christian Porter, had dissented from the majority view and recommended “no increase” because Wooden believed “risks are weighed in one direction” and growth in jobs and hours should be prioritised over a wage increase, he said.

The secretary of the Australian Council of Trade Unions, Sally McManus, said the increase was “very modest” and “it is disappointing that several awards will not see any increase until November or February”.

“However, it is clear in the decision that this panel of experts recognise that cutting wages in the middle of this crisis would be a disaster for working people and the economy and they have rejected the arguments put by some employers to effectively cut wages by freezing the minimum wage,” she said in The Guardian report.

The AiGroup Chief Executive, Innes Willox, said the majority’s decision was “risky given that the economy is in recession, many businesses are struggling to survive, and unemployment and underemployment have increased sharply”.

Mr Willox said the decision will harm “impact adversely both on hiring and firing decisions” which was “particularly concerning for young people who have been so heavily impacted by the downturn in the labour market”.