Almost 3M Australians Could Receive Up to 5% Pay Rise From July 1
Synopsis
Almost three million Australians could receive a pay rise of up to 5% from July 1 as the Fair Work Commission prepares to announce its annual minimum wage decision. Economists expect the increase to come in above inflation, while unions and business groups remain divided over the size of the wage rise. The ACTU has called for a 6% increase to help workers manage rising living costs, while some economists warn larger wage hikes could add further pressure to inflation and business costs across the economy.
The Fair Work Commission will hand down its annual minimum wage decision on Tuesday.
Key Highlights
- Wage verdict to be announced on Tuesday from Fair Work Commission
- Almost three million workers could be in line for a pay rise
- Economists predict a 4.5 to 5 percent pay increase
- Inflation currently sits at 4.2%
- Business groups and unions are still divided over how big the hike should be
Wage decision from the Fair Work Commission
The Fair Work Commission will announce its annual minimum wage decision on Tuesday morning which affects millions of Australians. It's largely anticipated that the hike will be above its inflation level of 4.2% at current.
Capital Economics economist Ben Udy said he anticipated the commission to approve a wage increase of 4.5% to 5%. Mr Udy said, That's above inflation and is broadly consistent with outcomes the Fair Work Commission has delivered over the last few years.
Last year the commission hiked minimum wage only by 3.5% on a time when inflation was about 3%. That is an additional 3.75% increase in 2024 on top of a rise of 5.75% for 2023 and a rise of 4.6% in 2022 (for workers). CPI was high (but declining) in 2023, when the economy recovered, little to deter unions from pushing for higher pay rises.
Union Push for Bigger Pay Rise
The Australian Council of Trade Unions is demanding a 6% increase, saying workers in lower paid jobs are still under pressure from the spiralling cost of living, and inflation. The ACTU stated that this rise would be across the level of the minimum wage, which will go to $26.45 per hour
One in four Australian workers are dependent on minimum award wages, especially employees working in hospitality, retail, fast food, administration and care sectors, the union said. A real wage increase, that is, wage growth in excess of inflation, has also found support from the Albanese Government.
In contrast, business groups suggested more modest increases. The Australian Chamber of Commerce and Industry backed a 3.5% increase, while AI Group pushed for a 3.9% rise.
Economists Identify New Risk to Inflation from Wage Rise
Several economists said the wage increase that was larger than expected could put more strain on inflation and business expenses nationwide.
AMP deputy chief economist Diana Mousina told news.com.au the Fair Work ruling covers not just minimum wage but awards and enterprise bargaining agreements too. Wage growth above inflation is going to pose a problem for inflation because that's significant input costs for the typical business, she cautioned.
Marcel Thieliant, head of APAC, Capital Economics described the 6 per cent hike by ACTU as “disastrous” and warned if wages rise quicker than inflation all year long it would contribute to what he termed an inflationary spiral.
FAQs
- How many Australians are eligible for a pay rise?
A potential impact on nearly three million workers
- The wages could rise how much?
Wages can rise 4.5%-5%.
- What increase does the ACTU want?
While the ACTU has demanded a 6 per cent raise in the minimum wage.
- Why are economists concerned about wage rise?
Some economists are concerned larger wage rises could add to inflation pressures.
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