Will 41 cents an hour make any difference for you?

UPDATE 4pm: Australia's "social cohesion" is at risk unless action is taken to address wage inequality, the Fair Work Commission has warned.

It came as FWC president Justice Iain Ross announced the national minimum wage would rise by $15.80 per week, or 2.6%, to $622.20 from July 1.

The boost, which will benefit Australia's 1.5 million lowest paid workers, attracted a mixed response from unions and employer groups.

In outlining reasons for the decision Justice Ross said the impending superannuation guarantee increase was a factor.

"Although it would not be appropriate to quantify its effect, the increase in modern award minimum wages and the national minimum wage we have determined in this review is lower than it otherwise would have been in the absence of the superannuation guarantee rate increase," Justice Ross said.

Easing GDP growth and an expected rise in unemployment also played a part in the decision, Justice Ross said.

And despite a number of submissions citing the effects of the carbon tax, the FWC said it did not influence the decision.

Justice Ross's most pointed comments related to the minimum wage failing to keep pace with pay hikes enjoyed by the nation's better-paid workers.

"It is apparent that while real earnings have generally increased over the past decade, earnings inequality is increasing," he said.

"Changes in the overall levels of earnings inequality show that real weekly earnings of full-time workers have become progressively less equal in the past decade: for each decile, the lower the earnings, the lower the rate of growth in earnings.

"If not addressed, these trends may have broader implications both for our economy and for the maintenance of social cohesion in Australia."

Justice Ross made the point minimum wages were a "blunt instrument" for addressing the needs of low-paid workers, adding the tax-transfer system was a better means of reducing earning inequality.

It was a point picked up by Australian Industry Group chief executive Innes Willox.

"As Ai Group has argued over many years, when a wage increase is awarded by the commission, by the time tax is paid the employee receives much less than the amount awarded," Mr Willox said.

"At the same time, the employer pays much more than the amount awarded once payroll tax, workers' compensation and other on-costs are taken into account. As a result, the additional costs to employers are considerably higher than the benefits received by employees."

Australian Chamber of Commerce and Industry chief executive Peter Anderson described the decision as a "body blow" to small business.

Mr Anderson said the increase, which equates to a rise of 41 cents per hour, would add $1.7 billion to the combined annual payroll of small business operators.

"The decision is not sympathetic to the small business economy which it bluntly hits," Mr Anderson said.

"There are no productivity or work practice changes to award regulation that offset the cost of this rise. There is no workable pathway given for a sector, a region or a business to argue incapacity to pay."

The ACCI had been arguing for an increase of no more than $5.80.Given the increase will take effect in less than a month, Mr Anderson was also critical of the lack of time businesses would have to plan for the impost. 

He said it would create a "triple whammy" for businesses from July 1, including the superannuation increase and penalty rate rises.

The Australian Council of Trade Union, which had been pushing for a $30 per week increase, was also angry, albeit for different reasons.

ACTU secretary Dave Oliver said the decision would lead to low paid workers falling further behind.

"This decision is a kick in the guts for 1.5 million low-paid workers and their families that will only further widen the gap between the low-paid and average earnings," Mr Oliver said.

"We are stunned that today the commission has acknowledged that wage inequality is rising in Australia but it has done absolutely nothing about it. In fact, after this decision, it will only get worse."

 

ON THE DECLINE

Recent Fair Work Commission minimum wage decisions:

  • 2010: $26 per week increase
  • 2011: $19.40
  • 2012: $17.10
  • 2013: $15.80

 

UPDATE 2pm: THE union representing minimum wage workers claims today's minimum wage increase isn't enough to make a real difference to the lives of the lower paid.

United Voice entered a submission on behalf of its members to the Fair Work Commission's annual wage review consultations, echoing the Australian Council of Trade Unions call for a $30 a week rise.

United Voice Queensland Secretary Gary Bullock says a $30 a week increase would have been a fair and affordable rise and the bare minimum workers deserve.

"Although any wage increase is always welcome, we are disappointed that the FWC only increased the weekly minimum wage by half of what unions recommended,'' Mr Bullock said.

"Raising the minimum wage by just 2.6% is simply not sufficient to make a real difference to these workers who are already struggling to contend with the rising cost of living."

"For many of our members, this award review is their only opportunity to get a wage increase, it's disappointing that once again the Minimum Wage Panel did not go far enough."

"As far as we are concerned $622.20 a week is not a liveable wage, especially when you take into account the rise in the cost of living particularly the recently announced electricity price hike by the Newman Government."

The pay decision comes as new figures show company profit growth the strongest since 2011.

Abiel Asmerom is a United Voice member and a cleaner based in Brisbane he says a 41 cent an hour increase is just not enough for him to make ends meet.

Abiel says "It's really tough to get by living on the minimum wage, everything is so expensive and with such low pay I can't buy the things I need or do the things I want."

"Everything is a struggle. The cost of living is so high that I have to work a lot of extra hours just to survive, which is really difficult."

"All I want is a liveable wage and to be able to afford to pay my rent, the bills and buy food without constantly worrying about where the money comes from.

The minimum wage for about 1.5 million of Australia's lowest paid workers will go up 2.6% from July this year.

In a final decision in the annual minimum wage review, the Fair Work Commission noted slower economic growth contributing to the wage rise.

The 2013-14 wage rise was less than the increase last year, on the back of below trend growth and the coming superannuation rise.

However, for those on the wage, it will see their weekly pay packets rise to $622.20, at an hourly rate of $16.37 from July 1.

The Commission noted a growing inequality between those on minimum wage and other wage earners over the past decade.

What will you do with your pay rise?

This poll ended on 10 June 2013.

Current Results

Pay my electricity bill

41%

Pay off credit card debt

12%

Buy more beer

13%

Save it for a rainy day

18%

Put it in the pokies

9%

Spend it on the kids

5%

This is not a scientific poll. The results reflect only the opinions of those who chose to participate.

EARLIER: The Fair Work Commission will reveal today how much Australia's lowest paid workers can expect to start receiving in their pay packets from July 1.

While unions have been pushing for a $30 per week pay rise, business and industry groups have been using the gloomy forecasts in the federal budget to argue for a boost of no more than $5 to $10 per week.

Last year the minium was lifted by $17-per-week to $606.

In a first for the FWC the announcement of the Annual Wage Review Decision will be live-streamed, removing the need for interested parties to be in attendance in Melbourne.

FWC president Justice Iain Ross will announce the decision at noon, with the live stream available from the commission's website at http://www.fwc.gov.au.

"By live-streaming the Annual Wage Review Decision anyone will be able to watch this important decision in real time, and understand what it may mean for them as individuals or for their business," Justice Ross said.

"This is a first for this kind of decision at the commission and we will closely monitor its success to see if there are further opportunities to use this kind of technology in the future."


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