Australia’s industrial relations tribunal has granted a 5.75 per cent increase in the national minimum wage which is to take effect on July 1, the Fair Work Commission, FWC, announced on Friday.
The increase fell between the seven percent rise advocated by the Australian Council of Trade Unions and the about four percent sought by employer groups.
The FWC said the current combination of economic circumstances, namely low unemployment, falling real wages and high inflation is very unusual and presents a particular challenge in the year’s review.
The commission said that a further challenge would be the expected sharp slowdown in economic growth over the next year.
“In our consideration, we have placed significant weight on the impact of the current rate of inflation on the ability of modern award-reliant employees, especially the low paid, to meet their basic financial needs.
“Inflation is reducing the real value of these employees’ incomes and causing households financial stress”, FWC said.
Inflation hit 6.8 per cent in the 12 months to April, up from 6.3 per cent in the 12 months to the end of March, Australian Bureau of Statistics data disclosed.
The spike was largely driven by an increase in fuel prices after the end of the temporary cut in the government’s fuel excise tax.
In the same period, the prices of housing, food and transport all rose by over seven percent.
The commission acknowledged that the awarded increase would not maintain the real value of minimum wage or reverse the reduction in real wages amid the cost-of-living crisis.
It said 5.75 per cent was the most that could be justified in the current economic circumstances.
