Another 1.06 million employees who rely on awards and are paid at the C10 trades person's rate or above will receive pay rises equal to 2.4 per cent.

In its decision, the commission said the general economic climate was "robust, with some continued improvement in productivity and historically low levels of inflation and wages growth".

"The prevailing economic circumstances provide an opportunity to improve the relative living standards of the low paid and to enable them to better meet their need," the full bench said.

"The level of increase we have decided upon will not lead to inflationary pressure and is highly unlikely to have any negative impact on employment. It will, however, mean a modest improvement in the real wages for those employees who are reliant on the national minimum wage and modern award minimum wages."

Despite some recent improvement in the relative living standards of minimum wage reliant employees, the commission said the relative position of low-paid workers has deteriorated over the past decade.

"Many low-paid workers live in households with low or very low disposable incomes. Around two-thirds of low-paid employees are found within the bottom half of the distribution of employee households and have lower living standards than other employees. Some low-paid award-reliant employee households have household incomes which places them below the poverty line."

It said women continued to be over-represented among award reliant employees and the low paid. "It follows, and we accept, that increases in minimum wages can provide some assistance in addressing the gender pay gap," it said.

Commenting on the economic environment, the commission said the economy had grown at close to trend, improving over the second half of 2015.


Stronger labour market conditions over the past year were evident across all measures, apart from the fall in hours worked in early 2016.

"The unemployment rate fell from 6.1 per cent in April 2015 to 5.7 per cent in April 2016," it said.

"As overall unemployment fell over the course of 2015 and into 2016, so too did the under-employment rate, long-term unemployment and the youth unemployment rate."

The full bench said all measures of inflation and wages growth were at historically low levels.

"Over the five years to 2014–15 labour productivity growth in the market sector was higher than over the previous five-year period," it said.

"Company gross operating profits grew by 2.8 per cent for non-mining industries over the year to the December quarter 2015, above the average for the past five years and greater than the 1.4 per cent growth over the year to the December quarter 2014. Mining industry profits continued to fall.

"Currently, wages growth is neither a source of inflationary pressure within the economy, nor a source of declining capacity for Australian firms to compete in international markets. The outlook for the Australian economy remains generally positive. Inflation and wages growth are expected to continue to be below average levels in the coming year or so."





