Sladen Snippet - Minimum wage increase of 3.5 per cent as of 1 July 2018

Today, the Expert Panel for annual wage reviews (Panel) of the Fair Work Commission (Commission) has held that it is appropriate to increase the modern award minimum wages by 3.5 per cent. The national minimum wage (NMW) will now be $719.20 per week (that is, $18.93 per hour). The determinations and order giving effect to the Panel’s decision will come into operation on 1 July 2018.

In making its determinations, the Panel noted the following:

  • the labour market has improved significantly with strong employment growth;
  • according to the Reserve Bank of Australia (RBA), the employment growth of 3 per cent is much higher than at the time of the last review, and higher than population growth;
  • the economy has continued to grow with real Gross Domestic Product (GDP) increasing by 2.4 per cent, and is broad-based with 16 out of 19 industries recording growth; and
  • low wages growth diminishes the sense of shared prosperity.

In calculating the new weekly NMW, the 3.5 per cent increase is applied to the current weekly NMW (and rounded to the nearest 10 cents), and then divided by 38 to obtain the new hourly NMW (and also rounded to the nearest 10 cents).

In reaching its decision, the Panel concluded the following:

  • the prevailing economic circumstances provide an opportunity to improve the relative living standards of the low paid and better enable them to meet their needs;
  • the 3.5 per cent increase will not lead to undue inflationary pressure and is highly unlikely to have any measurable negative impact on employment; and
  • absent any negative tax transfer effects, the employees reliant on the NMW and modern award minimum wages will be provided with an improvement in real wages and living standards.

The increase is lower than the 7.2 per cent increase requested by the ACTU, and accords with the Panel’s determinations of the national economic climate. The NMW order will also contain:

  • two special NMWs for award or agreement free employees with a disability;
  • wages provision for award or agreement free junior employees based on the percentages for juniors in the Miscellaneous Award 2010 applied to the NMW;
  • the apprentice wage provisions for award or agreement free employees to whom training arrangements apply, and transitional arrangements for first year award or agreement free adult employees engaged before 1 July 2014; and
  • an unchanged casual loading at 25 per cent for award or agreement free employees.

The timetable for the Annual Wage Review for the 2018 -19 period will be announced in the third quarter of 2018.

If you have any queries, please feel free to contact:

Jasmine O'Brien
Principal
Sladen Legal
T +61 3 9611 0149  l M +61 401 926 108
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: jobrien@sladen.com.au                                                                                                            

Katherine Dennis
Senior Associate  
Sladen Legal
T +61 3 9611 0151 | M +61 407 013 010
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: kdennis@sladen.com.au

Jasmine O'Brien