The wide impact of the minimum wage increase

“More than 2 million Australians will receive a pay rise after the Fair Work Commission increased the national minimum wage by 3.5 per cent, to $719.20 a week” (1).

It is likely to benefit a lot more than 2 million workers as the increase applies to, or influences:

  • The minimum wage, which will increase from $18.29 to $18.93 an hour.
  • The wages scales in 122 modern awards.
  • Thousands of enterprise agreements based on those modern awards. The pay rates in an enterprise agreement can’t be less than the pay rate in the relevant modern award.
  • Wage increases determined by employers for employees not covered by awards or enterprise agreements.

The Australian Council of Trade Unions has goal is to lift the minimum wage to 60% of the median wage. The median wage being that received by the person in the middle of the income distribution (2). This table shows that the ACTU has won the last three rounds in securing pay rises above the annual increase in average weekly earnings. The annual wage review increase for the past three years has been 2.4%, 3.3% and now 3.5%. The national average weekly earnings increase for the year to November was 1.72% in 2015, 2.15% in 2016 and 2.33% in 2017. (3)

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(1) (2) (3)  AWR is the annual wage review. AWE is the increase in average weekly earnings in the year to November, 2010-2017. Source - ABS 6302.0 http://www.abs. The median rate is likely to be below the average rate, but the stats are not readily available.

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