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Fair Day’s Pay for a Fair Day’s Work – Proposed Minimum Wage Increase

Australia’s Fair Work Commission (FWC) has kicked off its annual wage review to determine new minimum and award wage rates. The Federal Government is pushing for an increase in pay for the country’s lowest-paid workers to help them cope with the rising inflation. This move is similar to the approach taken by the government during last year’s review. Anthony Albanese, during the election campaign, committed to backing a minimum wage increase in line with inflation. This push aims to ensure that the real wages of Australia’s low-paid workers do not decrease. The proposed increase will impact 2.67 million workers, including 184,000 people who receive the minimum wage, and will come into effect on July 1. While the government has not yet specified the amount of the increase, Employment Minister Tony Burke argues that low-paid workers should not earn less in real terms, stating that “every Australian deserves a fair day’s pay for a fair day’s work.” However, business groups warn that such an increase could push the country into a recession, as many businesses are already struggling with the high cost of doing business. This is particularly true for small businesses, which are still recovering from the effects of the last three years.

Minimum Wage Increase Proposal – Unions

Unions in Australia are pushing for a wage increase that will keep pace with inflation, with a specific demand for a 7 per cent increase. This call for a wage hike is in response to the rising cost of living in the country, which has affected the purchasing power of the lowest-paid workers. The current minimum wage, which was increased by the FWC by 5.2 per cent from July 1 last year, stands at $21.38 per hour and $812.60 per week. However, ACTU is proposing an even higher increase, with the minimum hourly rate going up by $1.50 to $22.88, and the weekly rate increasing to $869.50. The ACTU secretary has stated that this increase is necessary for the survival of the lowest-paid workers in the country. ACTU argues that its demand for a wage increase will enable the lowest-paid workers to keep up with inflation and that the proposed increase of $1.50 per hour may not seem like much, but it could make a significant difference to the livelihoods of millions of workers.

How will the Minimum Wage Increase Affect Australian Businesses?

The proposed increase in minimum wages has sparked concerns among business groups about its potential negative impact on the economy. While they do not dispute the notion that employees deserve a pay raise, business leaders argue that it should be done fairly and sustainably, without contributing to inflation. The Australian Chamber for Commerce and Industry (ACCI) CEO, Andrew McKellar, hopes the Fair Work Commission (FWC) will find a happy medium supporting businesses, the economy, and workers. The ACCI submission suggests that a fair level for the wage increase is up to 3.5 per cent, along with the already legislated 0.5 per cent superannuation guarantee increase. The government also needs to consider the high cost of doing business, which may see more businesses struggling to keep up. The proposed 7 per cent increase in minimum wages could result in job losses, particularly for small businesses that are already under pressure. Many small businesses pay their employees the minimum award wages, and they are struggling to remain profitable. While the cost of living has been rising, so too has the cost of doing business, affecting small businesses the most. The increase in minimum wages would mean that businesses may have to make tough decisions about employment, hours of work, and future investments, which could have long-lasting effects. Therefore, businesses are urging the FWC to consider a reasonable and sustainable increase that does not cause any harm to the economy.


The rise in wages has a significant impact on inflation as it constitutes a significant proportion of firms’ costs. If wages grow at a higher rate than productivity, firms may increase their prices to maintain their profitability, leading to inflation. This relationship between wages and prices can also contribute to persistently high inflation when workers demand higher wages to compensate for rising costs due to inflation, further increasing firms’ costs. While the inflation rate in February decreased to 6.8%, it still remains much higher than the Reserve Bank of Australia‘s target range of 2-3%. The Australian Industry Group’s CEO, Innes Willox, acknowledged the need for a wage increase but deemed the ACTU proposal excessive, warning it could potentially cause a recession. As three more sets of inflation figures are yet to be released before the FWC makes a decision on minimum wage and award rates of pay in June, it remains unclear how the wage increase would affect inflation. The concern here is that an excessive wage increase could exacerbate the inflation problem and lead to interest rate hikes, adding to the financial pressure on households. Therefore, it is essential to find a balanced solution that benefits both workers and businesses while not risking economic stability.


If you are a business owner and are concerned about the potential impact of the proposed wage increase on your business’s structure and financial situation, we can assist you in navigating your options. Our team can provide you with detailed financial advice tailored to your business’s unique needs and circumstances, helping you to meet your financial goals and maintain profitability. We understand that managing a business can be challenging, especially in times of economic uncertainty, but with our expertise and guidance, you can feel confident in your ability to adapt and thrive in the face of change. Contact us today to learn more about how we can help you prepare for the upcoming wage increase and position your business for long-term success.

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