The 2016-17 Annual Wage Review has been handed down, with the Fair Work Commission determining the national minimum wage (NMW) should be increased by 3.3% from 1 July 2017 to $18.29 per hour or $694.90 per week. The Commission has also resolved to increase modern award minimum wages by 3.3 per cent.
In deciding to increase the minimum wage – a decision that will directly affect over 2.3 million employees who are reliant on minimum rates of pay – the Full Bench of the Fair Work Commission considered key changes in the economic environment, including positive (i.e. above long-term average) business conditions and a slight increase in unemployment.
The Full Bench also took into account that the value of the national minimum wage and modern award rates, over the last five years, has increased at “less than half” the rate of growth of labour productivity.
“The prevailing economic circumstances provide an opportunity to improve the relative living standards of the low paid and to enable them to better meet their needs,” Fair Work Commission President, Justice Ross said in statement on the Annual Wage Review.
“Our consideration of the international research on the impact of increases in minimum wages on employment, particularly the UK research, has fortified our view that modest and regular wage increases do not result in disemployment effects.
“The level of increase we have decided upon will not lead to inflationary pressure and is highly unlikely to have any measurable negative impact on employment. It will, however, mean an improvement in the real wages for those employees who are reliant on the NMW and modern award minimum wages and an improvement in their relative living standards.”
Justice Ross noted that the Commission accepted that low paid workers in full-time employment can reasonably expect a standard of living that exceeds poverty levels. Nevertheless, he acknowledged that the 3.3% increase in the national minimum wage would not lift all award-reliant employees out of poverty, particularly those from households with dependent children and supported by a single-wage earner.
He explained, “to grant an increase to the NMW and award minimum rates of the size necessary to immediately lift all full-time workers out of poverty, or an increase of the size proposed by some parties, is likely to have adverse employment effects on those groups who are already marginalised in the labour market, with a corresponding impact on the vulnerability of households to poverty due to loss of employment or hours”.
See also: The highest minimum wage increase since 2011… what does this mean for small businesses?