Jonathon Corlett

Declining business conditions justify lower minimum wage increase of 3%

Jonathon Corlett

31 May 2019

Award Conditions

The Fair Work Commission (FWC), in its annual wage review, has decided to increase all award minimum rates of pay by 3% from 1 July 2019.  The new national minimum weekly wage will be $740.80.

Unions had pushed for a 6% increase this year followed by a further 5.5% next year to provide for a ‘living wage’ for all award-reliant employees.  However, the FWC has instead awarded a lower increase than last year’s 3.5%.

Some other takeaways from the FWC’s decision include:

  • while some award-reliant employee households have household disposable incomes less than the relative poverty line (that is, 60% of the median income level), the last two annual wage reviews have resulted in real wage growth for award-reliant employees;
  • despite a softening in GDP growth and drop in inflation from last year (which the FWC used to justify the lower increase compared to 2018), the economy performed moderately well, with data indicating a strong labour market in terms of a low unemployment rate and 2.5% employment growth; and
  • given that women are disproportionately represented among those reliant on award minimum wages, it is expected that the increase will assist in reducing the gender pay gap.

What does this mean for employers?

It is important for employers to make sure that they pay their employees (at least) in accordance with the new minimum wage rates from 1 July 2019.  This is particularly so in the current environment where the Fair Work Ombudsman has been cracking down on award compliance following a number of notorious ‘wage theft’ cases in the last couple of years.

In the lead up to 1 July 2019, the FWC will make formal orders to increase each award’s rates of pay.  Those orders will be accessible from the 2018/19 annual wage review page on the FWC website.

Employers may also seek to take the opportunity to audit and review their employment practices to ensure that they are complying with all their statutory and award obligations, not just minimum wage rates. For example, over the last 12 months many awards have been varied to increase the obligations of employers when paying annualised salaries, and when dealing with employee requests for flexible working arrangements.

If you would like us to review your organisation’s compliance with statutory and award obligations, or seek further information about the FWC’s decision, please contact a member of our Employment and Safety team.