The increase of close to $16 a week is less than the union’s demand for $27 but more than the below-inflation rise business groups had urged

This article is more than 5 years old

This article is more than 5 years old

Australia’s lowest paid workers will receive a pay rise of 2.5%, taking the minimum wage to $17.29 an hour.

The decision by the Fair Work Commission takes the minimum wage to $656.90 a week, or just under $34,200 a year. It is an increase of 42c an hour.

The president of the commission, Iain Ross, acknowledged that the increase was less than last year’s, saying that factors like growing unemployment and unsteadiness in non-mining sector jobs were a “reason for some caution”.

But he said that there was “no evidence of corporate stress”, pointing to the fact that rates of business bankruptcy were low and that more businesses opened their doors than shut them in the past 12 months.

“The increase we have recommended is consistent with the promotion of social inclusion through increased workforce participation and is also compatible with the need to encourage collective bargaining,” Ross said, in announcing the commission’s decision.

The increase of nearly $16 a week is far less than the $27 that the Australian Council of Trade Unions had been pushing for, and the union representing hospitality and childcare workers, United Voice, labelled it “a slap in the face”.

“United Voice supported the ACTU claim for a $27 per week increase, which would have got Australia closer to a true living minimum wage,” president Jo Schofield said.

The secretary of the ACTU, Dave Oliver, said the cost of living continues to go up, creating a class of working poor.

“We are deeply disappointed in this decision,” he said. “It doesn’t address the household stress that low-income earners are enduring at the moment and, more significantly, we are extremely concerned now about the ever increasing gap between average earnings and the minimum wage.”

Cassandra Goldie, head of the Australian Council of Social Service, said that the increase would not stop the cost of living pressures many Australians face.

“This decision helps keep some people’s heads above the water but does little to close the gap between minimum and median wages, which we would like to see narrow,” Goldie said. “A third of people below the poverty line live in households in paid work. Many people will continue to feel the strain of rapidly rising housing costs in a context of slow wages growth.”

Business groups are not happy either. The Australian Council of Commerce and Industry (Acci) had pushed for a below-inflation increase of $5.70 a week, a cut to wages in real terms.



“We hold concerns that this increase is too high against the backdrop of softening labour market conditions and an economy undergoing structural adjustment,” Acci’s director of employment, Jenny Lambert, said.



“Most small businesses run on lean margins, operate in a price-sensitive environment and are unable to pass costs on to consumers. So there is a real prospect it will lead to firms reducing staff numbers or the hours offered.”

The Australian National Retailers’ Association said that the increase would adversely affect the sector.

“The flow on effects of the percentage increase in the minimum wage will be hard felt in the retail sector which has a higher award and is characterised by penalty rates”, chief executive Anna McPhee said.

Chris Richardson from Deloitte Access Economics said it was possible the wage increase would affect jobs in the retail sector, but that it would be unlikely to affect the wider economy.

“[The wage increase is] that middle-of-the-road decision, with what business said and what unions said,” Richardson told Sky News.

He said the increase of 2.5% was in line with the average increase of 2.3% that non-award or minimum wage jobs had received in the past financial year.

Nearly 1.9m Australians are affected by the minimum wage and the award minimum wage.