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Posted: 2023-06-02 00:41:18

Australia's minimum wage will increase by 8.6 per cent, and award workers will get a 5.75 per cent pay boost, in a Fair Work Commission (FWC) decision. 

The new national minimum wage will be $23.23 per hour, and $882.80 per week, based on a 38-hour week.

But that increase in the minimum wage comes with an important technicality.

The FWC said it was confident the hourly pay increases would only make a "modest" contribution to wages growth in 2023-24 and "will not cause or contribute to any wage-price spiral."

"We acknowledge that this increase will not maintain the real value of modern award minimum wages, nor reverse the reduction in real value that has occurred over recent years," the commission said.

The boost to the wage rates will begin in the first full pay period on, or after, July 1.

Significantly for the minimum wage, the FWC said it would end the alignment between the national minimum wage rate and the C14 classification wage rate in modern awards, arguing that the C14 rate was too low and no longer constituted a proper minimum wage safety net.

Instead, it would realign the national minimum wage with the slightly higher C13 classification wage rate in modern awards, and after that, it would lift the C13 wage rate by 5.75 per cent.

That means the national minimum wage will lift by 8.65 per cent from July 1, compared to last year's lower-aligned minimum wage rate.

However, the FWC has framed that increase in the minimum wage as only being a 5.75 per cent increase, because that's the size of the increase that will occur for the slightly higher C13 classification award rate that the minimum wage will now be aligned with.

The current minimum wage is $21.38 per hour, but the new minimum wage will be $23.23 per hour, which represents an increase of $1.85 an hour (+8.65 per cent).

The Albanese government had supported the idea of lifting the minimum wage to match inflation, so the real wages of Australia's low-paid workers didn't go backwards.

Headline inflation, as measured by the consumer price index (CPI), was running at 7 per cent in the March quarter.

"The 5.75 per cent increase to awards is the biggest in history and will help 2.7 million workers," Treasurer Jim Chalmers said on Friday.

Unions welcome the pay rise, business groups don't

The decision will see a small group of workers (0.7 per cent of workers, or over 100,000 people) on the lowest minimum wage of $21.38 an hour getting an 8.6 per cent pay jump to $23.23 an hour.

A bigger group (20.5 per cent of workers, or around 2.8 million people) on award pay rates will see a 5.75 per cent rise from their current pay rates.

Sally McManus, the secretary of the Australian Council of Trade Unions (ACTU), was quick to welcome the pay increases.

"This is an absolutely essential increase for all of the people in Australia who are struggling so hard at the moment just to survive, to pay their rent, to pay their groceries, to pay all of the basics," she said.

"They are the people who actually keep the economy going in everyway."

Ms McManus said the 5.75 per cent increase in award wage rates was not the 7 per cent increase unions pushed for, but it was "a hell of a lot more" than what employers had argued for.

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