2.7 million Aussies set for a minimum wage boost

The minimum wage will increase by 5.2% from 1 July 2022, the Fair Work Commission has announced today.

Workers will receive an additional $1.05 per hour, with the rate increasing from $20.33 to $21.38 per hour. The increase equates to an extra $40 a week and is slightly above the latest 5.1% inflation figure from the Australian Bureau of Statistics.

Workers on award rates will receive a 4.6% increase, subject to a minimum $40 weekly increase for workers on award rates below $869.60 per week. This represents a slight cut in real wages, particularly if inflation continues to rise as some have predicted.

The decision will affect at least to 2.7 million workers on the national minimum or award minimum wages and will come into effect from 1 July.

But for workers in the aviation, tourism and hospitality sectors, the Fair Work Commission ruled the increase will be delayed to 1 October due to “exceptional circumstances” in these industries.

How much will the minimum wage increase by?

From 1 July 2022, the national minimum wage will increase to $21.38 per hour, or $812.60 per week (for a 38-hour week).

Casual employees covered by the national minimum wage will also continue to receive a casual loading of at least 25% of their base wages.

How does the minimum wage work?

The minimum wage is set by the Fair Work Commission, not the government.

The Fair Work Commission is an independent body which reviews and adjusts the minimum wage every year. As part of this review, the Commission’s Expert Panel considers written submissions from organisations and individuals. This year, that included a submission from the new federal government, which called for low-paid workers to not “go backwards” amid rising inflation rates.

At the end of the review, the Fair Work Commission makes a national minimum wage order. This then applies on or after 1 July.

Many employers are also covered by a modern award. These awards are documents that outline the minimum wage, as well as other terms and conditions, for employees in certain industries and occupations. Employees under these awards often have their wage increases tied to the minimum wage, even if they are paid a higher amount.

From 1 July 2022, the super guarantee rate is also set to increase from 10% to 10.5% of a worker’s ordinary time earnings. The $450 monthly income threshold to receive super payments will also be scrapped.

Cover image source: Robyn Mackenzie/Shutterstock.com.