FWC minimum wage rise ‘higher than necessary’ amid ‘abysmal productivity’

Reactions to the Annual Wage Review decision to raise the minimum wage by 3.5 per cent have flooded in, with some arguing that the Fair Work Commission’s figure was over the top.

The Fair Work Commission (FWC) handed down the decision of its Annual Wage Review, announcing a 3.5 per cent increase to the minimum wage, bringing the hourly wage rate for real modern award workers to $24.95.

During the announcement of the increase, Justice Adam Hatcher said: “The principal consideration which has guided our decision is the fact that, since July 2021, employees who are reliant on modern award minimum wages or the National Minimum Wage have suffered a reduction in the real value of their wage rates.

“In the case of modern awards, the benchmark C10 award rate of pay has declined by 4.5 percentage points relative to inflation as measured by the consumer price index.

“The result has been that living standards for employees dependent on modern award wages have been squeezed and the low paid have experienced greater difficulty in meeting their everyday needs.”

The increase was supported by the Labor government, with new Minister for Employment and Workplace Relations Amanda Rishworth saying the decision was a win for workers.

“I welcome the Fair Work Commission’s decision to increase the National Minimum Wage and award wages,” said Minister Rishworth.

“Our government believes that workers should get ahead with an economically sustainable real wage increase.

“A real wage increase provides further relief to our lowest-paid workers who continue to face cost-of-living pressures. The panel’s decision will benefit up to 2.9 million Australian workers who have their pay set by an award.”

Treasurer Jim Chalmers noted that the commission’s decision will be impactful for workers and “good for the economy”.

“Under Labor, real wages are up, inflation is down, unemployment is low, incomes are growing, and we’ve had two interest rate cuts in three months,” Chalmers said.

“We know people are still under pressure, and that’s why this decision and our ongoing cost-of-living relief are so important.

“Boosting wages, cutting taxes for every taxpayer and creating more jobs are central parts of our efforts to help Australians with the cost of living.”

Despite praise from the government and worker unions, employer groups scrutinised the decision. Before the decision was announced, Australian Industry Group (Ai Group) chief executive Innes Willox claimed that “a proposal higher than 2.6 per cent is completely unjustified”.

Now, in reflection of the commission’s decision, Willox has argued that the percentage increase was “higher than necessary” due to the “abysmal productivity” rates across Australia.

“Today’s decision by the Fair Work Commission to raise minimum and award wages by 3.5 per cent is higher than necessary given Australia’s abysmal productivity,” said Willox.

“Australia’s economy is muddling through the lowest period of growth since the recession of the early 1990s. Business margins are falling, private sector employment and investment is weak, while productivity is barely moving.

“We estimate that this decision will directly increase the national wages bill by around $5 billion over the coming financial year. Its effects will fall hardest on industries such as retail, manufacturing, and accommodation and food, which are already struggling with very weak business conditions.”

Employment Hero chief executive Ben Thompson also expressed disgruntled views about the commission’s decision.

“The Fair Work Commission’s decision might make headlines, but it’s yesterday’s economics. The truth? Wages aren’t waiting,” Thompson said.

“Employment Hero’s real-time payroll data drawn from over 2 million verified payslips shows median wages jumped 5.9 per cent last month alone, with teenage pay skyrocketing by 13.4 per cent. That’s not future inflation pressure. That’s real-time wage velocity.

“Fair Work is setting wages based on outdated conditions, while small businesses are already absorbing pay hikes just to compete for talent. Our wage data updates in real time. Their policy refresh? Once a year, if that. It’s no wonder SMEs feel abandoned, they’re flying blind, forced to navigate inflation with a broken compass.

“The question shouldn’t be ’how much should we raise the minimum wage?’ It should be: ‘why are we still using rear-view data to steer the economy?’”

Greens Senator Barbara Pocock, however, argued that inflated profits are contributing to inflation at a much larger scale than low-paid workers throughout Australia.

“The FWC should prioritise the needs of Australia’s lowest paid workers, not the wealthy top end of town. We need to call out the real perpetrators of inflation – big corporations pursuing big profits – instead of holding back low-paid workers,” she said.

“Profits are driving inflation, not wages, and this decision puts further pressure on workers who are trying to make ends meet on a low wage.”