Australia raises minimum wage by 5.75% as living costs surge

AUSTRALIA’S independent wage-setting body said on Friday (Jun 2) it would raise the minimum wage by 5.75 per cent from Jul 1, as families grapple with soaring living costs.

The lowest-paid employees will receive A$22.61 (S$20.10) an hour from Jul 1, according to Reuters calculations based on the current rate of A$21.38. The decision from the Fair Work Commission would affect more than two million workers.

“The level of wage increase we have determined is, we consider, the most that can reasonably be justified in the current economic circumstances,” said the Commission in a statement.

“In our consideration, we have placed significant weight on the impact of the current rate of inflation on the ability of modern award-reliant employees, especially the low paid, to meet their basic financial needs.”

Some economists have feared that a sizeable increase could set a benchmark for other wage expectations and complicate the Reserve Bank of Australia’s job of returning inflation back to 2-3 per cent target range.

So far, aggregate wage growth - which accelerated to a decade-high of 3.7% last quarter - has lagged forecasts, with Governor Philip Lowe warning of upside risks to wages from weak productivty growth, rather than nominal wages. REUTERS