Federal Minimum Wage Increase 2022

15 June 2022

The Fair Work Commission announced earlier this morning its Annual Wage Review 2021-22 Decision.

Commission President, Justice Iain Ross announced a 4.6 per cent increase in award rates over $869.60 a week (which will be the main impact for schools), subject to a minimum increase for adult award classifications of $40 per week, which equates to the 5.2% headline increase reported in the media.

The new national minimum wage will be $812.60 per week or $21.38 per hour.

Modern award minimum wage rates above $869.60 per week will receive a 4.6 per cent adjustment, wage rates below $869.60 per week will be adjusted by $40 per week.

The Albanese government has argued for a rise which ensures wages do not go backwards when compared to inflation, which sits at 5.1 per cent. Unions have pushed for a 5.5 per cent increase which they say will prevent a further real wage cut for a quarter of all workers. In contrast, The Australian Industry Group urged the commission to limit its increase to 2.5 per cent.

Last year the national minimum wage increased by 2.5 per cent to $772.60 a week.

This increase will flow through to increases in salaries under modern awards from 1 July, with formal decisions being made by the Commission to do so before that time.  Schools engaging staff under the modern awards should prepare for this increase.

While schools engaging staff under individual school enterprise agreements or multi-enterprise agreements will not be immediately affected this increase will certainly impact salary expectations for the next round of agreements.

Reserve Bank Inflation Expectations

Obviously a significant factor in the Fair Work Commissions decision, and the submission from the Federal Government, is the current inflation rates.

In a media interview last night the Reserve Bank Governor indicated in relation to inflation predictions that '[a]t the moment it's 5 per cent, and by the end of the year I expect inflation to get to 7 per cent'.  This is well above the Reserve Bank target of 2-3 per cent and recent historical rates.

He went on to say, when asked about future inflation rates, that '[t]he peak will be in the December quarter this year and by the time we get into the second half of next year, inflation will clearly be coming down, but in the first quarter, we'll see lower rates of headline inflation.'  He gave no indication of how much lower these first quarter 2023 inflation rates are expected to be.

Once again, these inflation rates will add further pressure on future wage claims

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