The minimum wage increase will further “stoke the inflation fire”, says the Australian Chamber of Commerce and Industry (ACCI).
The call was made in response to the Fair Work Commission’s (FWC) annual wage review decision which will see a 5.75% increase in minimum and award wages for 2.6 million workers from July 1.
Minimum wages will increase to $882.80 per week or $23.23 per hour. For some workers on the lowest award rate, the rise will be 8.6%.
The decision falls short of the Australian Council of Trade Union’s (ACTU) 7% claim but is above the 4% lift sought by ACCI.
“It is small business that will suffer at the hands of an out-of-control wages bill, not large corporations,” ACCI Chief Executive Andrew McKellar says.
“The idea that small business is rolling in riches is laughable.”
The decision will add significant cost pressures to businesses employing people under award conditions, says Innes Willox, Chief Executive of Ai Group.
“Crucially, the decision highlights that unless we see measures implemented to help turn our productivity problems around, it is difficult to see this scale of increase being met by employers without them seeking to raise prices to partially offset their higher costs,” he says.
“The more general increase of 5.75% will add to pressures in wage negotiations for similar increases for above-award employees.
“It is critical that the large increase in award rates does not flow through to wages in general and it is particularly important that we do not see an extension of such high wage increases across future years in multi-year enterprise agreements.”
The Australian economy is facing an increasingly sombre outlook over the next two years, McKellar says.
“Warnings from the Reserve Bank (RBA) and Treasury have revealed expectations of faltering economic growth, anaemic business investment, tighter household spending and rising unemployment,” he says.
RBA forecasts are for employment growth to fall to about 1% over 2023-24 and for the unemployment rate to increase to around 4.2% by June next year and settle around 4.5%.
Prior to 2021, the unemployment rate had not been below 5% on a sustained basis since the 1970s.
In making its decision, the FWC consulted with a range of stakeholders, including ACCI, ACTU, Ai Group, various employer and employee organisations, individual employers and employees, the Australian Government, and State governments.
It considered relative living standards, the needs of the low paid, workforce participation, and the performance and competitiveness of the national economy. It also deliberated gender equality and job security.
“The level of wage increase we have determined is the most that can reasonably be justified in the current economic circumstances,” the FWC says.
“In the medium to long term, it is desirable that modern award minimum wages maintain their real value and increase in line with the trend rate of national productivity growth.
“A return to that path is likely to be possible in future reviews when there is a reversion to a lower inflationary environment and trend productivity growth.”
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