A major business peak body has said the new minimum wage increase is acceptable to Australian businesses amid the current economic situation.
On June 3, the Fair Work Commission (FWC) announced that it would lift the minimum wage by 3.75 percent from July 1, taking it from $23.23 (US$15.46) to $24.10.
The change will result in 2.6 million workers on minimum wages, or 20.7 percent of Australia’s workforce, earning an extra $33 a week.
The new increase is well below last year’s record rise of 5.75 percent, which had sparked strong objections from the business community.
In delivering the decision, the FWC noted that the current inflation rate was significantly lower than a year ago.
The Treasury has forecasted that inflation would drop to 2.75 percent by December 2024 before falling further to 2.5 percent by the end of 2025.
“The increase of 3.75 percent, which we have determined, is broadly in line with forecast wage growth across the economy in 2024 and will make only a modest contribution to the total amount of wage growth in 2024.
Peak Body Says Focus Needs to Be on Productivity
Following the announcement, the Australian Chamber of Commerce and Industry (ACCI), the largest business association in the country, said the new minimum wage was “acceptable.”The CEO added that while the new rate was not conducive to shoring up the Australian economy, it did not pose a substantial threat to inflation—as long as the economy could address the productivity issue.
“Over the past year, productivity has been flat at best. For the outcome of 3.75 percent to be justified, it is essential that there is renewed growth in productivity as an urgent priority,” he said.
“This decision is further evidence of wages being de-linked from underlying productivity, which is not an economically prudent approach.”
At the same time, the ACCI was content that the FWC did not give in to the “extreme” demands from the unions, which called for a 5 percent increase in the minimum wage.
“Small businesses are grappling with significant increase costs as a result of the increased compliance burden, and wages remain a concern in such an environment,” Mr. McKellar said.
Government’s Response
In a joint statement, Treasurer Jim Chalmers and Employment Minister Tony Burke welcomed the FWC’s decision, saying it was “a win for workers, a win for women and it will help with the cost of living.”“We want to see strong and sustainable wage growth because we see this as part of the solution to the cost-of-living challenge, not part of the problem,” they said.
The ministers also touted that since the Labor government came into power, the minimum wage had risen by $143.30 per week or $7,451.60 per year for Australian workers.
“Our economic plan is all about helping Australians earn more and keep more of what they earn, which is why our budget is focused on easing cost-of-living pressures, including delivering a tax cut for every taxpayer,” they said.
“We believe one of the best ways to deal with cost of living pressures is to ensure workers earn enough to provide for their loved ones and to get ahead.”
