Industry groups have criticised the decision to increase Australia’s minimum wage to $20.33 (US$15.45) per hour, saying it was hard to fathom the move given there were still businesses struggling from the COVID recession.
The Fair Work Commission announced the 2.5 percent increase, which equals 49 cents per hour or $18.80 per week—to the minimum wage on Wednesday. It will take effect from July 1. However, some COVID-hit industries, such as aviation and tourism, have been awarded a four-month delay.
Innes Willox, the CEO of Australian Industry Group (Ai Group), said that a 2.5 percent increase was too much for employers in the current environment.
“The quantum of the minimum wage increase awarded today by the Fair Work Commission decision is tempting fate given the uncertainties and fragilities associated with the economic recovery,” Willox said in a statement.
He called the wage increase unwarranted as the latest inflation figures were at 1.1 percent while wages rose at an average rate of 1.5 percent.
“On a purchasing power parity basis, Australia has the highest national minimum wage in the world,” Willox said. “The increase will put even more distance between Australia’s national minimum wage and minimum wages in other countries.”
The Australian Council of Trade Unions (ACTU) said they were pleased with the outcome, despite originally seeking a 3.5 percent increase. However, the union was disappointed that the rise was delayed in some industries.
“Unions are disappointed that the Commission has decided to delay this increase for hundreds of thousands of workers, including those in retail where many companies have posted record profits,” ACTU said.
ACTU Secretary Sally McManus called for wage suppression in the country to stop, saying there could not be an economic recovery without wages recovery.
“Suppressing wages hurts the economic recovery, and it hurts working people, their families, and communities,” McManus said.
The Australian Retailers Association (ARA) said they were disappointed that the Commission made the decision amid continued uncertain economic conditions.
ARA CEO Paul Zahra said ARA’s submission supported a minimum wage decision this year but that any increase should have been in line with inflation.
“Businesses are still adjusting to the last wage increase on February 1 this year and face additional pressure when an increase to the Superannuation Guarantee increase kicks in from July 1,” Zahra said.
In 2020 during the height of CCP virus restrictions, the Fair Work Commission made the decision to increase minimum wages by 1.75 percent.
Since 2019, Australia’s minimum wage has been the highest out of all OECD countries on the basis of purchasing power.