Huge rise for millions of Australians as Fair Work Commission awards 5.2 per cent wage rise

Australia’s 2.7 million minimum wage and lowest-paid workers on awards have received a 5.2 per cent pay increase – the most generous since 2006 to cope with soaring inflation and cost of living pressures.

This will see the low paid receive $812.60 a week or $21.38 an hour from July 1 by order of the Fair Work Commission.

The increase is also the highest since 2006 during the mining boom but was slightly below the ACTU’s push for a 5.5 per cent increase.

The minimum wage increase is more than double the wage price index of 2.4 per cent, in the year to March, to cope with inflation soaring at 5.1 per cent – the fastest pace in two decades.

The industrial umpire announced the decision at 10am, Sydney time, after Reserve Bank of Australia governor Philip Lowe predicted inflation in 2022 could hit seven per cent in 2022 for the first time since 1990. 

Prime Minister Anthony Albanese‘s government had put in a submission calling on the Fair Work Commission to match the 5.1 per cent inflation rate so real wages after inflation didn’t go backwards.

Australia’s 2.7 million minimum wage and low-paid workers have received a 5.2 per cent pay increase

Fair Work Commission president Iain Ross said high inflation particularly affected the low paid and rejected calls from employer groups to award no increase or a 2.5 per cent rise.

‘The share rise in inflation impacts business and workers,’ he said.

‘The level of minimum wage increases proposed by various employer bodies would result in real wage reductions for award-reliant workers, many of whom are low paid.

‘Inflation also erodes the real value of workers’ wages and reduces their living standards.

‘The low-paid are particularly vulnerable in the context of rising inflation.’

Justice Ross noted the 6.6 per cent rise in food prices made cost of living pressures particularly hard for the low-paid.

‘The increased cost of non-discretionary items will particularly impact low-income households and many low-paid workers,’ he said. 

‘We have concluded that the changes in the economic context weigh in favour of an increase in the national minimum wage and in modern award minimum wages.

‘We are conscious that the low-paid are particularly vulnerable in the context of rising inflation.’ 

Justice Ross said the Fair Work Commission accepted the need for ‘moderation’ to contain inflationary pressures. 

Overall pay increases have been stuck below the long-term average of three per cent since mid-2013 despite unemployment in April sinking to a 48-year low of 3.9 per cent.

Young women were more likely to be affected by minimum wage decisions, because they are more likely to work in hospitality and retail jobs.

During the election campaign Mr Albanese said he ‘absolutely’ supported the idea of the Fair Work Commission awarding a 5.1 per cent pay rise to minimum wage workers.

Prime Minister Anthony Albanese ‘s government had put in a submission calling on the Fair Work Commission to match the 5.1 per cent inflation rate so real wages after inflation didn’t go backwards

In his fifth day on the job, he indicated he would be lobbying for a generous pay increase for the low paid, after advocating a $1 an hour increase to the minimum wage.

Dr Lowe said he is now expecting inflation to hit seven per cent by the end of 2022 – which would be the highest level since the June quarter of 1990 ahead of a recession the following year.

That is also much higher than the existing rate of inflation of 5.1 per cent – itself the highest since 2001 as average petrol prices climbed above $2 a litre.

Borrowers are being warned the cash rate could surge to 2.5 per cent for the first time in eight years, which would see a typical borrower with a $600,000 mortgage owe the bank $725 extra a month on their repayments.

Dr Lowe admitted bringing inflation within the central bank’s target would be difficult, in his first appearance since the RBA this month raised the cash rate by half a percentage point.

‘At the moment, it’s five per cent and by the end of the year, I expect inflation to get to seven per cent,’ he told the ABC 7.30 host Leigh Sales in a rare interview.

‘That’s a very high number and we need to be able to chart a course back to two to three per cent inflation.

ANZ had expected a 4.5 per cent increase in the minimum wage