Effective July 1, there’s a noteworthy uptick in Australia’s minimum wage by 5.75%, to $859.32 weekly. This adjustment will undeniably impact small businesses as their wage expenses increase, though it falls short in bridging the gap caused by the soaring cost of living for the nation’s lowest earners.
This decision was unveiled recently as a part of the Fair Work Commission (FWC)’s 2023 Annual Wage Review. The National Minimum Wage is set to rise from $21.38 to $22.58 per hour for full-time employees, translating to a weekly jump from $812.60 to $859.32, based on a 38-hour work week.
Additionally, a rise of 5.75% will be applied in all modern award minimum wages. Cumulatively, these changes mean that about a quarter of all Australian workers will see their income grow directly due to this ruling.
This announcement arrived on the heels of disconcerting inflation data that pegged annual Consumer Price Index growth at a substantial 6.8% for the year ending April. This data underscores the increasing financial strain felt by small businesses and households across the country.
The FWC, in its decision, has underscored the importance of inflation on the financial sustainability of modern award-reliant workers, particularly those at the lower end of the pay scale.
Moreover, the FWC recognized that this wage increase may benefit female employees, thus aiding in narrowing the pervasive gender wage gap.
However, certain limiting factors have been considered to cap the rise at 5.75%.
These include the 0.5% increase in the Superannuation Guarantee set to kick in from 1st July, a projected downturn in the casual labour market, and the FWC’s intention to prevent the entrenchment of high inflation expectations by avoiding a direct link between the minimum wage and inflation.
What should you do as an employer?
If you’re an employer, ensure that your employees who are paid based on a modern award or the National Minimum Wage are set to receive their rightful pay raise in line with the effective date.
If you’re an employer who doesn’t strictly adhere to award terms, for example, if you pay above award rates, provide annualised salaries or ‘flat rates’ of pay, it’s crucial that your payments still meet all obligations under the relevant award or minimum wage once the increases come into effect.
For employers who pay according to an enterprise agreement, it’s necessary to ensure that the base pay rates under the agreement do not fall below the updated relevant modern award rates, especially if your agreement was established several years prior.
When will these changes be implemented?
These modifications will take effect from the first complete pay period on or after July 1, 2023.
For further clarity and understanding, you can access the Commission’s decision here, and a summary of the decision can be found here. We highly recommend reviewing these resources to stay abreast of these vital changes.
In Summary
- Minimum wage increase to $22.58 per hour for permanent full time employees
- Modern Awards increase of 5.75% across all industries
- Superannuation Guarantee increasing to 11%
Further Information
Online awards will be updated with the new rates progressively over the next few weeks. These will be available here: Fairwork Newsroom