The Fair Work Commission has decided to grant a 5.2% increase to the national minimum wage, the highest rise since 2006.
Minimum wages will increase by at least $40 a week from 1 July with the hourly pay rate to go from $20.33 to $21.38, the Fair Work Commission has ruled.
The decision of the commission to grant a 5.2% increase to the national minimum wage and 4.6% for award minimums, came in the annual wage review on Wednesday.
However, the commission ruled the increase will be delayed in the aviation, tourism, and hospitality sectors until 1 October due to “exceptional circumstances”, that included their slower recovery from the COVID recession.
Prime Minister Anthony Albanese praised the decision saying it would “make a difference to the people who are struggling with the cost of living”.
“The truth is that many of those people who are on the minimum wage are the heroes that saw us through the pandemic,” he said.
“They deserve more than our thanks, they deserve a pay rise, and today they got it.”
There were some business groups that argued against a pay rise, saying supply chain and cost pressures made it unsustainable.
Australian Chamber of Commerce and Industry chief executive Andrew McKellar said this increase is risky to the economy and we should get back to “effective enterprising bargaining, flexible wage setting driven by the market”.
“By our calculations, this will add $7.9 billion in costs to affected businesses over the year ahead,” McKellar said.
“That will be a very considerable burden that those businesses will either have to take to the bottom line or pass on to their customers.”
Fair Work Commission president Iain Ross said the inflation was putting too much pressure on low-paid workers for them to ignore.
“We are conscious that the low paid are particularly vulnerable in the context of rising inflation,” he said.
“If we were to accept the submissions of some of the employer bodies, and award no increase at all, then the real wage reduction would be even more severe.”
Mr Ross also said the current labour market was strong enough that this would not have a “significant adverse effect” on the economy from the pay increase.
