The Fair Work Commission has released it’s Annual Wage Review decision today. Will you get a pay rise?
The Fair Work Commission (FWC) is Australia’s national workplace relations tribunal. It sets the national minimum wage and the minimum wages in modern awards. FWC reviews the minimum wage every year and makes a decision taking into account many factors, including inflation, the poverty line, potential effect on unemployment and other economic conditions.
The Fair Work Commission Minimum Wage Increase
The FWC released its decision today that minimum wage and all modern award minimum wages will increase by 3% beginning July 1st 2019.
This will bring the minimum wage from $719.20 to $740.80 per week, an increase of $21.60 to the weekly rate. This rise is lower than the two previous years, with 3.3% and 3.5% increases in 2017 and 2018.
The FWC president Iain Ross said that the decision took into account recent economic conditions, in-particular the lack of GDP growth and inflation. Around 2.2 million Australian workers will benefit from an increase in the minimum wage.
The FWC is confident that the decision will not lead to any adverse inflationary outcome and nor will it have any measurable negative impact on employment.
Australian Council of Trade Unions had called for a much larger increase, supporting the idea of a ‘living wage’. It still labelled the increase as a win and a welcome pay rise for millions of low paid workers, with a long way to go to ensure that minimum wage is enough for workers to live on and support their families.
However, other organisations were calling for lower increases with the current economic conditions. The ABC reported that Australian Chamber of Commerce and Industry (ACCI) and The Australian Industry Group (Ai Group) had pushed for increases of 1.8% and 2% respectively.
ACCI claimed that it’s harder for small businesses in-particular, and on those who are unemployed and under-employed.
The SMH reported that the Restaurant and Catering Association argued for a wage freeze, voicing concerns for businesses who employ less than 20 people. With many restaurants and cafes having to absorb these costs without an increase to business income.
This could have an effect on ASX businesses such as Domino’s Pizza Enterprises Ltd. (ASX: DMP), Retail Food Group Limited (ASX: RFG) and Collins Foods Ltd (ASX: CKF).
Wesfarmers Ltd (ASX: WES) and Woolworths Group Ltd (ASX: WOW) may also find themselves absorbing an increase in the minimum wage.
What Does This Mean?
With the unemployment rate rising, the RBA considering an interest rate cut for June and wage growth at historically low levels, the economy is looking pretty flat. Some ASX businesses may feel the pinch even harder with a rise in their minimum wage costs.
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