“We are satisfied that the level of increases we have decided upon will not lead to any adverse inflationary outcome and nor will it have any measurable negative impact on employment,» Mr Ross said. «However, such increases will mean an improvement in the real wages of those employees who are reliant on minimum wages and an improvement in their living standards.»
Mr Ross said the decision would directly impact on about 2.2 million workers, and indirectly on even more under modern award minimum wages.
Such increases will mean an improvement in the real wages of those employees who are reliant on minimum wages and an improvement in their living standards.
Fair Commission President Iain Ross
Despite the recent fall in GDP growth, the Australian economy had performed relatively well, he said.
“Our overall assessment is that the relative living standards of national minimum wage and award-reliant employees have improved in recent years,» he said. «Although, some low-paid award-reliant households have disposable incomes which are less than the 60 per cent of median income relative poverty line.
“Some low-paid households are plainly experiencing significant disadvantage.»
Australian Chamber of Commerce and Industry chief executive officer James Pearson said employers respect the independent decisions of the Fair Work Commission, «but a third straight increase well in excess of inflation will be difficult for businesses, particularly small businesses, to absorb».
“These increases will make it that much harder for more than 680,000 of our fellow Australians who are unemployed, and a further 1.1 million underemployed, to find a job or more hours of work,» he said.
The Australian Industry Group had lobbied for a 2 per cent wage increase, an extra $14.40 per week in the national minimum wage.
Ai Group Chief Executive, Innes Willox, had argued that the economy was slowing this year and businesses were struggling to cope with high costs, including rising energy prices. He said productivity growth was weak in industries with mainly low-wage employees.
The Australian Council of Trade Unions had called on the government to raise the minimum wage to a ‘living wage’ to ensure no one in Australia works for wages that leave them living in poverty.
ACTU assistant secretary Liam O’Brien said the increase was a «welcome pay rise for millions of low paid workers, especially in the face of further penalty rate cuts in a few weeks».
“We have a long way to go to ensure that the minimum wage is enough for workers to live on and support their families,» he said. “No one in Australia should be living in poverty while working full time, but we know that thousands of people are facing this reality.»
Reserve Bank governor Philip Lowe has repeatedly raised concerns about slow wages growth in Australia, and recently flagged an interest rate cut.
The RBA board will meet on Tuesday with markets and economists predicting the central bank will slice the cash rate to a record-low of 1.25 per cent.
March quarter national accounts will be released the following day and are expected to show a further slow down in economic growth.
Jo Masters, chief economist at Ernst and Young said the 3 per cent increase was higher than the 1.3 per cent rise in inflation in the year to the March quarter.
«It is also faster than national wage growth, which measured by the wage price index rose by 2.3 per cent in the year to the March quarter,” she said. «The minimum wage increase directly impacts around 20 per cent of the labour force, with a further 20 per cent impacting through agreements based on ‘minimum wage plus’.”
“With the Reserve Bank of Australia also commenting on the expected boost to income from the tax strategies, it will be important for the new government to pass the necessary legislation as soon as parliament resumes.”
“A key question now is whether any income growth, from tax change or otherwise, is spent of saved, bearing in mind that household debt is closing in on 200 per cent of disposable income.»
Kim Nolan, 26, who works in a contract call centre in Melbourne, is on a base rate of about $22 per hour. He works as a casual to boost that rate to about $27.
«I would like to go full time to also have sick leave and holidays but I need to get the casual loadings to get by in the short term,» he said. «It is difficult because I have to go to work when I’m sick.»
He said the 3 per cent increase was disappointing and would barely keep up with increases in his costs of living.
«It’s definitely better than nothing and will probably only cover the rent increase I got at the start of the year,» he said.
«It is apparently a real increase, but it feels pretty stagnant.»
Anna Patty is Workplace Editor for The Sydney Morning Herald. She is a former Education Editor, State Political Reporter and Health Reporter.