Almost three million workers will learn how much their pay packets will increase as the industrial umpire hands down its highly anticipated annual wage review.
The Fair Work Commission’s decision, to be revealed on Tuesday, sets the increase for minimum and award wage scales from July 1.
With the blockade of the Strait of Hormuz exacerbating already high inflation pressures, unions have been pushing the commission for a bumper pay rise to ensure workers don’t go backwards.
Peak body the Australian Council of Trade Unions has called for an increase of six per cent, which would be the biggest increase to award wages on record.
‘The Fair Work Commission must not allow low-paid workers like those in the hospo, retail and care industries to go backwards,’ said ACTU secretary Sally McManus.
‘Rent, mortgages, and bills are locked in, meaning if these workers’ wages fall short of inflation, they have no choice but to cut back on essentials like food and doctors’ visits.’
But employer groups argue a six per cent rise would further squeeze business margins, resulting in higher insolvencies and entrenching inflation as firms are forced to pass on costs to consumers.
Headline inflation was 4.2 per cent in April, according to the Australian Bureau of Statistics
Almost three million workers will learn how much their pay packets will increase as the industrial umpire hands down its highly anticipated annual wage review
The Australian Chamber of Commerce and Industry has recommended an increase of 3.5 per cent, arguing underlying inflation, which was 3.4 per cent in April, is a better benchmark.
‘The panel should therefore avoid converting a volatile price shock into a permanent wage shock through an outsized increase,’ ACCI chief economist Peter Grist said in a submission to the commission.
But that would still result in a pay cut in real terms as workers fall behind the rising cost of living.
Without nominating an exact figure, the government has called for a ‘sustainable real wage increase’.
‘Decent pay and conditions is a really important way that we help people with the cost of living,’ Treasurer Jim Chalmers told reporters in Brisbane on Monday.
In recent years, the commission has tended to split the difference between union and employer demands and award pay rises modestly above the headline inflation rate.
Oxford Economics Australia expected a pay rise of between 4.5 and 5 per cent.
‘That’s broadly consistent with what the Fair Work Commission has delivered over the last few years, delivering slightly above inflation wage gains,’ the advisory firm’s lead economist Ben Udy told Sky News on Monday.
The decision covers about one in five employees, but given they tend to be lower paid, it only amounts to 11.2 per cent of the national wages bill, according to commission estimates.
But economists say the decision influences pay rise claims in occupations across the economy, and therefore results in broader flow-on effects.
