2.6 million minimum and award wage earners set for July 1 pay boost

The pay packets of 2.6 million workers are due to be increased on July 1, with a workplace judge set to announce his decision on the annual salary on Monday morning.

The Fair Work Commission’s annual pay review, which affects minimum and bonus wage earners, or about one in five workers, is expected to lead to a rise of between 3.5 and 4 per cent at the rate of pay of $23.23 an hour.

In submissions to the Commission, the top employee representative, the ACTU, argued for a 5% rise, arguing that workers under pressure on prices deserved a pay rise.

Meanwhile, the Australian Chamber of Commerce and Industry has argued for a 2 per cent rise, which is likely to represent a real wage cut, which it says reflects the increased cost pressures facing businesses, particularly smaller businesses.

Similar to the previous two interventions in the annual wage case, the Albanian government has argued that Australia’s lowest paid workers are “not going backwards” and are actually pushing for at least an increase in the rate of inflation, which is 3.6% for most. recent measures.

“We want strong and sustained wage growth because we see it as part of the solution to the cost of living challenge, not part of the problem,” Treasurer Jim Chalmers said before the decision.

“For Australian workers, we have taken action and recommended to the Commission to ensure that the real wages of low-paid workers are not reduced.”

But with progress on reducing inflation stalled since December, economists warned that an increase beyond 4 percent could further complicate the central bank’s efforts to fight inflation, which has already saddled borrowers with 13 rate hikes in the past 25 months .

“There is still a risk of another 25 basis point rate hike, especially if Monday’s Fair Work decision on the minimum and bonus wages surprises June quarter CPI as well,” UBS chief economist George Tharenou said.

This view was echoed by ACCI chief executive Andrew McKellar, who said the Commission needed to factor in still weak productivity growth alongside the third phase of tax cuts and pension guarantee increases which will start on 1 July.

“For us to exceed this inflation target range, we would need to see evidence that there has been strong underlying productivity growth in the economy. That was not the case at all,” Mr McKellar said.

“The Commission should take into account the fact that there are important measures to offset other cost of living pressures – this should be used as an opportunity to moderate wage inflation in the coming year.”

However, ACTU secretary Sally McManus rejected suggestions that the Commission’s decision would affect wider wage increases across the economy, pointing to easing price pressures despite last year’s increase.

“I think it is quite clear that this is not the case; those two things are unrelated,” McManus said.

“We have a bargaining system and we have a system based on the decisions of the Fair Work Commission … so it is not possible because they are separate that there is a wage price spiral.”

In last year’s decision, the commission split the minimum wage and award for the first time, raising the minimum wage to $23.23 an hour, an 8.6 percent increase, while increasing the award by a more modest 5.75 percent.

The decision, the largest increase in more than a decade, fueled concerns that it would fuel inflation and keep interest rates higher for longer. Inflation has since decreased by 2.4 percentage points in the nine months since the decision.

But AMP chief economist Shane Oliver said the wage fixing was likely to exacerbate price pressures, particularly in the labour-intensive service sector.

“Last year’s decision … contributed about 0.7 percentage points to wage growth, helping to push it above 4 percent and currently likely contributing to sticky services inflation,” said Dr. Oliver.

dr. Oliver said the figure would help the RBA push inflation back into its target range.

“A rise of around 4 percent would give workers a real wage increase, not so high as to increase the risk of a wage price spiral, … and in line with a rough estimate that 4 percent wage growth is consistent with 2 percent wage growth. cent to 3% inflation.”

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