The Fair Work Commission's Expert Panel today announced a significant increase to minimum wages following the Annual Wage Review 2023-24.
From the first full pay period on or after 1 July 2023, the minimum rates of pay in modern awards will increase by 5.75%. Last year, the Panel increased minimum wages by 4.6%, subject to a minimum increase for adult award classifications of $40 per week.
The National Minimum Wage (NMW) will also see an increase of 8.6% as a result of the Panel determining to:
- align the NMW with the current C13 classification wage rate, being the lowest classification rate applicable to ongoing employment in most modern awards; and
- increase the NMW by 5.75% (following increases of 5.2% in 2022 and 2.5% in 2021).
The Panel cited current low levels of unemployment and inflation reducing the real value of employees' incomes, noting that they will particularly benefit female dominated low-paid sectors. However, the Panel acknowledged that the increases would not maintain the real value of wages in line with inflation, with the Consumer Price Index in the December quarter at 7.8%, with underlying inflation at 6.9%.
The Panel considered submissions from Unions, employer groups, the Federal Government and State Governments. Unions proposed increases of 7% in view of inflation and increasing costs of living while business groups proposed an increase of 3.5%.
Moderating factors in the Panel's decision included the imminent increase to the superannuation guarantee rate from 10.5% to 11% from 1 July 2023, the effect that the expected weakening labour market will have on casual employees and particular industries, and the need to avoid entrenching the expectation of wages following inflation.
What does this mean for employers?
The Panel's decision will affect millions of Australian workers, including those who have their rate of pay set under the NMW, a modern award or in some cases, an enterprise agreement.
Employers must reflect these increases from the first full pay period on or after 1 July 2023. Failure to implement these increases will result in underpayments which could lead to legal action including the imposition of financial penalties for breaches of the Fair Work Act 2009.
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