5.2% Increase to National Minimum Wage
As part of its Annual Wage Review for 2021 / 2022, an Expert Panel of the Fair Work Commission (FWC) has today announced a 5.2% increase in the national minimum wage. That means it will be $812.60 (or $21.38 per hour) from 1 July 2022. This represents a marked increase from the 2.5% increase set by the Expert Panel in 2020 / 2021.
The ACTU had proposed an increase of 5.5%, while the Labor Government had recommended in its submission to the Expert Panel that the FWC ensure wages of low paid workers “not go backwards” given high inflation and cost of living pressures. The Australian Industry Group had proposed an increase of 2.5%, and the Australian Chamber of Commerce and Industry supported an increase of 3%.
In setting the minimum wage the Expert Panel had regard to key difference in economic indicators from last financial year. That included increases in CPI and inflation, as well as the strengthening of the labour market as demonstrated by a falling unemployment rate.
The sharp rise in cost of living and inflation, which is forecast to peak at around 6%, was identified as having a particularly significant impact on lower-paid workers justifying an increase to the minimum wage above what had been proposed by the employer associations. However, the Expert Panel also recognised the need to balance this impact against the potential inflationary pressures arising from any increase itself.
In a further acknowledgment of the cost of living pressures on low-paid workers, the Expert Panel also decided to increase modern award minimum wages by 4.6% for those who earn above $869.60. Those on wage rates below that amount will receive a flat $40 per week increase.
The variations to modern awards will operate from 1 July 2022, with a delayed operative date of 1 October 2022 for certain modern awards in the aviation, tourism and hospitality sector.
Today’s announcement presents a good opportunity for employers to review the remuneration of their award-covered employees. It is suggested that employers take steps to ensure minimum rates of pay are in accordance with the relevant modern award, and that annualised salary arrangements sufficiently offset those rates, and any entitlements payable, for each pay period.