Australian Workers on Minimum Wage Hoping for Significant Increase in July

The recent change in Australian government has brought the upcoming minimum wage increase into strong focus for employers, employees and unions.

A change in federal government occurred in Australia in mid-May, with the incumbent conservative Liberal government ousted in favour of the central-left Labor Party.  Towards the end of the campaign, the rising cost of living and increases to the minimum wage became key tipping points. The Labor Party is supporting an increase of almost $1 per hour to the minimum wage.

The minimum wage in Australia is reviewed every year in June, by a panel who take into consideration social, economic, and other external factors.  The minimum wage is currently A$20.33 per hour.  Around 2.2 million Australian workers (roughly 25% of the workforce) are paid either the minimum wage or a minimum ‘Award Wage’.  The Modern Award system sets minimum pay rates and entitlements in 121 industries and occupations, with annual increases informed by the minimum wage hike.  

With headline inflation running at approximately 6%, stagnant wage growth, and rising interest rates, Australian workers will welcome a significant increase in minimum wages – possibly the highest increase in more than 10 years.  While three quarters of employees are not eligible for the mandatory increase, it acts as a benchmark to Unions and Employers in the negotiation of Enterprise Agreements which cover a further 35% of employees in Australia.   Under an Enterprise Agreement, employees can be no worse off than the minimum Award Wages applicable in their industry or occupation. 

Outlook for Employers: The eagerly awaited wage increases will be released in early July.  There has been a marked increase in industrial action in recent months, with wage related strikes from public servants (including teachers, nurses, paramedics and transport workers) becoming more prevalent.  Australian employers are also acutely aware of the importance of ensuring eligible employees wages are adjusted accordingly.   The Fair Work Commission acts promptly in the litigation of businesses large and small who fail to pay workers their minimum entitlements.