Australia raises minimum wages by 3.5% as inflation eases

[SYDNEY] Australia’s independent wage-setting body on Tuesday raised the national minimum wage by 3.5 per cent effective July 1, a real wage increase for about 2.6 million workers on the minimum wage as inflationary pressures ease in the economy.

The minimum rate will rise to A$24.94 (S$20.80) per hour, resulting in an extra A$1,670 in a year for full-time employees, according to the Fair Work Commission’s (FWC) annual review.

Headline consumer price inflation held at 2.4 per cent in the first quarter, comfortably within the Reserve Bank of Australia’s target band of 2 per cent to 3 per cent and having come down from the 7.8 per cent peak in late 2022.

“The Reserve Bank’s assessment that inflation has sustainably returned to its target range ... indicates that this inflationary episode is now over,” FWC President Adam Hatcher said.

“This provides us with an opportunity to go at least some of the way towards correcting what has happened over the last four years by awarding a real increase to ... the national minimum wage.”

Last year, the FWC increased minimum wages by 3.75 per cent but that was largely in line with inflation.

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The Australian Council of Trade Unions (ACTU) described the wage increase as “a great outcome” for employees on minimum wages, who it said suffered the most when inflation soared after the Covid-19 pandemic.

“Our lowest-paid workers are getting ahead again,” ACTU Secretary Sally McManus told reporters.

The Reserve Bank of Australia cut interest rates to a two-year low last month as cooling inflation at home offered scope to counter rising global trade risks, and left the door open to further easing in the months ahead.

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At the same time, the labour market has remained surprisingly resilient, with the jobless rate hovering at 4.1 per cent for over a year now. Employment gains have been driven by a surge in public sector jobs, with still tepid wage growth suggesting few risks of a damaging wage-price spiral. REUTERS