KEY POINTS
- Australia's minimum wage will increase by 5.75 per cent.
- The increase will come into effect from 1 July.
- About 2.7 million workers will be affected by the Fair Work Commission's ruling.
James Harrison, a Sydney bartender, has more than half of his wages eaten up by "astronomical" rent.
"I mostly live off two-minute noodles and a can of Coke as a luxury," he said.
"I can't put the heater on because I cannot pay the electricity bill."
On Friday, Mr Harrison was among the millions of workers to get a pay increase as a result of the annual wage decision by the Fair Work Commission.
Fair Work Commission president Adam Hatcher announced that the minimum wage and modern award wages would rise 5.75 per cent from 1 July.
But workers on the minimum wage will actually get an 8.6 per cent increase due to a technical change: a "realignment" of the minimum wage with the "C13 classification wage rate" that applies to most modern awards.
For the lowest paid, it will mean their wages rise to $882.80 a week - or $23.23 an hour.
More than 20 per cent of the country's workers (2.7 million) are paid minimum award rates and only 0.7 per cent (180,000) earn the national minimum wage, which is the lowest rate.
Mr Harrison said the increase won't completely alleviate the cost of living pressures he faces, but it would provide "a bit more comfort".
The pay increase will come into effect from 1 July. Source: AAP / Bianca De Marchi
"In our consideration, we have placed significant weight on that the impact of the current rate of inflation on the ability of modern award employees, especially the low-paid, to meet their basic financial needs," he said in his announcement on Friday.
He said the decision balanced the desire to avoid adding to inflation while keeping in mind the lowest-paid workers.
"We acknowledge that this increase will not maintain the real value of modern award minimum wages, nor reverse the reduction real value which has occurred over recent years. However, the level of wage increase is what we consider to be justified in the current economic circumstances," he said.
Joanna Clements is among those affected by the Fair Work Commission's decision to raise the minimum wage. Source: SBS News
The disability support worker, who lives in Sydney, is among the millions of people whose pay will rise as a result of the FWC's announcement.
"I'm very excited... I've seen a lot of very good things over the years in community services and disability over the past few years," she told SBS News.
"It feels like an acknowledgement because it is a very hard industry to work in. You have to have a lot of grit, you have to have a lot of heart, and you have to put up with a lot of crap.
"[The increase] feels like it's a good start."
Ms Clements said it would mean she could put enough petrol in her car to go and visit her family in Bathurst.
Unions welcome 'essential increase'
The Australian Council of Trade Unions (ACTU) said although the increase of 5.75 per cent fell short of their call for a 7 per cent rise, the outcome is better than the four per cent sought by employer groups.
"It is an absolutely essential increase for all the people in Australia that are struggling so hard at the moment just to survive to pay their rent, to pay their groceries - to pay all the basics," ACTU secretary Sally McManus said.
"It has been working Australians who have borne the brunt of the current circumstances in their household budgets through interest rate rises and also through inflationary problems."
in the year to April, falling from a 32-year high in the annual rate of 7.8 per cent recorded in the December quarter.
Monthly inflation data from the Australian Bureau of Statistics shows the increase during the pandemic. Source: SBS News
Employer groups warn of increased costs to businesses
Employer groups like the Australian Chamber of Commerce and Industry were pushing for nothing higher than 4 per cent, warning of the risk of stoking inflation.
The group's CEO Andrew McKellar labelled the decision "disappointing". He said it would increase costs for business owners.
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"We estimate it will mean an extra $12.6 billion in costs into the supply chain. This will impact particularly small businesses most. They are the ones who end up paying these award wages," he said.
Mr McKellar said the extra cost could affect future hiring decisions.
"ACCI's concern is that it will have an impact on hiring decisions in the future and it will have an impact on some small businesses."
Pledge to address gender equality
Outlining the Fair Work Commission decision, Mr Hatcher said the expert panel would at a later date look to more fully resolving the gender equality issue of improving pay conditions for female workers working part-time and in casual arrangements.
"The scope and timing of the present review has prevented these gender equality issues being addressed to finality. However, the imperative of the amendments made by the Parliament to the Fair Work Act last year concerning general equality is that these issues must be resolved in future proceedings," he said.
Speaking alongside Ms McManus, shop assistant Chris said many members he represents in the retail sector were women experiencing the impacts of the gender pay gap.
"I can tell you our members are doing it tough, but today's decision is a good first step," he said.
"It will get us over the first hurdle - with the massive increase in rent that people are experiencing - and hopefully set us up for an outcome next year that will take into account the significant gender pay gap, which is huge in the retail industry, where the overwhelming majority of workers are women."
