Published: June 5, 2014 – 11:02AM
The wages of Australia’s 1.5 million lowest paid workers will increase by an extra $18.70 per week from July in response to a decline in their living standards.
Fair Work Commission president Justice Iain Ross delivered the decision on Wednesday to increase the minimum wage by 3 per cent to $640.90 per week or $16.87 per hour.
Justice Ross said the distribution of earnings had become more unequal in recent decades and the annual wage review had a role to play in ”ameliorating inequality”.
”While real earnings have generally increased over the past decade, earnings inequality is increasing,” he said.
”This has reduced the relative living standards of award-reliant workers and reduced the capacity of the low paid to meet their needs.”
The decision comes as the business community and unions mobilise for a fight over weekend penalty rates.
Prime Minister Tony Abbott, who made a pre-election promise not to reform penalty rates in his first term, is under pressure from his backbench and business to cut weekend and holiday penalty rates.
The Fair Work Commission last month ruled to limit Sunday penalty rates for some restaurant and cafe staff from July, expected to save businesses up to $112 million a year.
Justice Ross said solid growth in the Australian economy, relatively low unemployment and moderate inflation had supported a rise in the minimum wage. The superannuation guarantee rate to apply from July had been a ”moderating factor”.
Trade unions had called for a $27 (3.9 per cent) increase in the minimum wage from $622.20 – three times the increase recommended by the Australian Chamber of Commerce and Industry.
ACTU Secretary Dave Oliver said the Fair Work Commission’s decision was unfair in the context of Wednesday’s National Accounts figures which showed the economy was strong, but wages were lagging behind.
”Today’s decision means that low paid workers including cleaners, retail and hospitality staff, child care workers, farm labourers, and factory workers will fall even further behind the rest of the workforce,” Mr Oliver said.
David O’Byrne, Acting National Secretary of United Voice said the increase would only cover the 2.9 per cent inflation of the past year. ”It condemns the one-and-a-half million workers and their family who rely on the minimum wage for their pay increases to continuing hardship,” he said.
Jos de Bruin, chief executive officer of the Master Grocers Australia/Liquor Retailers Australia said the increase was disappointing for retailers who would be forced to review staffing levels next financial year.
He said the minimum wage increase was on top of the 0.25 per cent increase in the superannuation guarantee payment that will rise to 9.5 per cent from July.
”This is very disappointing news at a time when the retail sector is experiencing unprecedented economic and competitive challenges,” he said.
Australian Industry Group chief executive Innes Willox said the 3 per cent minimum wage increase was too high and a ”risky decision that puts the interests of workers with secure jobs ahead of the unemployed and those in less secure jobs”.
Employment Minister Eric Abetz said the government recognises the annual wage decision and is focused on building the economy to provide stronger employment growth.