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 20202021.

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.