Australia increases national minimum wages for 2017/18

In Australia, national minimum wages are set by an independent statutory tribunal - the Fair Work Commission (FWC or the Commission). Once a year FWC reviews minimum wages in all sectors of the economy and decides whether or not to increase them.

In conducting an annual wage review, FWC must apply section 284(1) the Fair Work Act 2009 which provides:

The FWC must establish and maintain a safety net of fair minimum wages, taking into account:

(a)  the performance and competitiveness of the national economy, including productivity, business competitiveness and viability, inflation and employment growth; and

(b)  promoting social inclusion through increased workforce participation; and

(c)  relative living standards and the needs of the low paid; and

(d)  the principle of equal remuneration for work of equal or comparable value; and

(e)  providing a comprehensive range of fair minimum wages to junior employees, employees to whom training arrangements apply and employees with a disability.

On 6 June 2017, FWC handed down its latest annual review. FWC increased minimum wages in all sectors by 3.3%. The minimum adult wage rate was increased to A$694.90 for a 38 hour week or A$18.29 per hour. In deciding this level of increase the Commission noted the changes to the economic environment over the last twelve months. The Commission stated:

"The key changes in the economic environment in this Review are:

  • (i)  Real net national disposable income increased by 6.8 per cent over the year to the December 2016, after it fell in the previous year.
  • (ii)  All measures of inflation have increased since the March quarter 2016, but are currently at the lower end of the RBA’s medium-term target range (CPI increased by 2.1 per cent over the year to the March quarter 2017).1
  • (iii)  Over the 5 years to the December quarter 2016, labour productivity growth in the market sector was higher than the previous 5-year period and rose sharply in 2016.
  • (iv)   On an annual basis, profit growth was particularly strong in 2016 compared with the preceding years and above the 5-year and 10-year averages for both total industries and non-mining industries.
  • (v) The principal business conditions surveys show that the assessment of business conditions is positive and above long-term average levels.” ( Statement by the Commission)

The Commission noted that the economy grew with real GDP increasing by 2.4% and that unemployment remained stable at 5.8% in April 2017.

The increases will come into effect on 1 July 2017.

A full copy of the decision can be found at: [2017] FWCFB 3500 (PDF)

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