Thinking | 1 June 2018

National Minimum Wage update 2017 – 2018

The Fair Work Commission’s Expert Panel for annual wage reviews (Panel) today published its annual wage review under the Fair Work Act 2009 (Cth).

The outcome of the Panel’s review is that from 1 July 2018:

  • the National Minimum Wage and modern award minimum wages will increase by 3.5% and
  • the National Minimum Wage will increase to $719.20 per week (up from $694.90 per week) or $18.93 per hour (up from $18.29 per hour).

The Panel declared that over 24.6% of Australian employees who are reliant on minimum rates of pay or award rates of pay will be directly affected by the increase.

Factors influencing the Panel’s decision

In making its decision, the Panel cited several key changes in the national economic environment. These included the increasing health of the labour market and employment growth of over 3%, coupled with low wage growth and low inflation.

The Panel also highlighted social considerations, such as the impact of low wage growth on Australians’ ‘sense of shared prosperity’ and the promotion of social inclusion through increased workforce participation. It noted that the robust economic circumstances provide an opportunity to ensure the needs of the lowest paid are being met.

The increase of $24.30 per week falls well short of the $50 increase lobbied for by the Australian Council of Trade Unions (ACTU). The ACTU argued a substantial increase is necessary as low-paid workers struggle with rising costs of living while wage growth stagnates. This approach was part of the ACTU’s long-term strategy to peg the minimum wage at 60% of the median wage.

In making its decision, the Panel acknowledged that to grant an increase of the size proposed by some parties would be 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.

What does this mean for employers?

The decision of the Panel means that employers who pay their employees at or close to the minimum wage rates pursuant to a modern award, the National Minimum Wage or other industrial instrument, will be required to increase their employees’ pay in the first pay period on or after 1 July 2018.

Employers who pay their employees above the minimum wage rates may be able to absorb the increases without making any changes.

Employers can contact a member of the Hall & Wilcox employment team with any queries or for assistance with meeting their minimum wage compliance obligations.

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Alison has close to 18 years’ experience in a wide-ranging employment practice, advising private sector and public sector clients...

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