The Guardian • Issue #2012

Workers win historic wage increase in Annual Wage Review

  • The Guardian
  • Issue #2012

Photo: Susannah Binsted – (CC BY 2.0)

The Fair Work Commission (FWC) has struck a strong middle ground with a 5.2 per cent wage hike announced on 15th June. The minimum wage will rise by 5.2 per cent from 1st July. That’s a new minimum $21.38 per hour or an increase of about $40 per week. Minimum award rates will increase by 4.6 per cent or a minimum of $40 per week.

Governments, industry groups, and trade unions are invited to make submissions to the Annual Wage Review (AWR). This year, the Australian Council of Trade Unions (ACTU) proposed a 5.5 per cent increase to the national minimum wage as well as minimum award rates.

The Australian Chamber of Commerce and Industry, Australian Industry Group and other bodies representing employers unsurprisingly proposed a much lower increase of around 2.5-3 per cent. Other groups even suggested that the minimum wage should not increase! After much controversy in the media, the Albanese government ultimately submitted that the “real wages of low-paid workers [should] not go backwards.”

The FWC noted in its summary decision that one of the “most significant changes since last year’s [AWR] has been the sharp rise in the cost of living and the strengthening of the labor market.” Inflation, in general, is through the roof, with the cost of fresh food at an all-time high. During last year’s AWR inflation stood at around 1.1 per cent. This year that number was 5.1 per cent.

Iceberg lettuce has become the symbol of this crisis, and the Victorian Trades Hall Council (VTHC) was quick to jump on this trend by pointing out that an increase of $40 per week will only buy around three heads of lettuce at current prices. While funny, this reminds us that there are serious questions looming about whether 5.2 per cent is enough.

ACTU suggests that it isn’t. In a statement on the 8th May, the peak union body pointed out that a higher increase of 5.5 per cent would keep pace not just with inflation as it currently stands, but also with the RBA’s forecast for an inflation increase to 5.5 per cent by mid-year.

There was no sign of this argument in ACTU’s press release celebrating the win on the 15th June, but it was argued that longer-term systemic change to the wage-setting system is needed:

“Australia needs a plan to ensure that over time, wages grow for working people, and a system which will deliver on that plan. The current system is not delivering for working people.”

If the RBA’s forecast of 5.5 per cent comes true, then the 5.2 per cent wage increase will not be enough to relieve workers of the burden of the rising cost of living. At the time of writing, the RBA has yet to release its June statistics on the Consumer Price Index (CPI).

After ten years of stagnant wages, the FWC’s decision is a huge relief to workers. However, it also shows just how broken the system is. As Sally McManus, President of the ACTU, points out, wages have gone backwards in real terms despite “low unemployment, high productivity and high profits.” To put it simply: capitalism cannot deliver long-term sustainable wage growth for workers, not while profit-hungry employers and governments sympathetic to their cause have a say in the matter.

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