Minimum wage increase: Why Australia’s lowest-paid workers could be in for some VERY good news

The federal government has backed a pay rise for the country’s lowest-paid workers, urging the industrial arbiter not to use its upcoming tax cuts for low-income earners as a substitute for an increase in the national minimum wage.

It comes after business lobby groups called on the Fair Work Commission to cap the size of this year’s pay rise in its annual pay review in response to Labor’s changes to stage income tax cuts 3.

In its official submission to the Commission, the government has argued that real wages should not retreat as Australia’s low-income workers continue to struggle under the persistent pressures of the high cost of living.

‘Current economic circumstances are challenging, as global uncertainty, high inflation and higher interest rates weigh on activity. “Inflation has moderated to its lowest level in two years, but remains above the RBA’s target band of 2 to 3 percent,” a draft reads.

The government, by calling for a wage increase for low-paid workers in line with inflation, influenced a 5.75 percent increase in all award rates and an increase in the national minimum wage from $812.60 to $882.80 per week.

‘Despite increases in nominal wages and the return of annual real wage growth, the real value of premium wages has eroded in recent years due to the global inflationary environment.

“Low-wage workers and their families are particularly affected by cost-of-living pressures because they typically do not have savings to draw on to cover rising costs.”

The government’s position is similar to the Labor Party’s submission last year, which effectively advocated a pay rise for low-paid workers in line with inflation and influenced a 5.75 per cent rise in all rates of pay. award and an increase in the national minimum wage from $812.60 to $882.80. one week.

Labor’s renewed stance in support of low-paid workers came after it strengthened income tax relief for lower-income Australians by reviewing its previously legislated Stage 3 income tax cuts. .

Under the new tax regime, which takes effect on July 1, the average worker will take home an extra $29 a week, while the lowest paid will pocket $15 more.

Treasurer Jim Chalmers (pictured) said workers were entitled to both tax cuts and a pay rise.

In its Fair Work presentation, the government said the cuts will provide cost of living relief in a way that does not increase inflationary pressures, but they have been designed to be “in addition” to any increases in grants and minimum wages. .

In its own submission, the Australian Industrial Group called on the wages arbiter to take “full account” of incoming tax changes when considering this year’s increase in minimum wages.

The Fair Work Commission routinely reviews the impact of tax changes during its annual pay review.

In a statement, Treasurer Jim Chalmers said workers were entitled to both tax cuts and a pay rise.

“We recommend that the Fair Work Commission ensures the real wages of Australia’s low-paid workers do not go backwards,” Dr Chalmers said.

“While we have made welcome progress on inflation and seen a return to real wage growth ahead of schedule, many Australians are still under pressure, particularly low-wage workers.”