The Fair Work Commission (FWC) has today published its Annual Wage Review 2022-23, announcing a 5.75% increase to all Modern Awards.
For the National Minimum Wage, the FWC has decided to align the National Minimum Wage with the current C13 classification wage rate in Modern Awards (instead of C14), and then apply a 5.75% increase, representing an effective increase of 8.6% to $882.80 per week or $23.23 per hour.
The FWC acknowledged that this increase will not maintain the real value of modern award minimum wages nor reverse the reduction in real value which has occurred over recent years. However, the FWC considered this was the most that can reasonably be justified in the current economic circumstances, namely low unemployment, falling real wages and high inflation, together with an expected sharp slowdown in economic growth over the next year.
The FWC placed significant weight on the impact of the current rate of inflation on the ability of modern award-reliant employees, especially the low paid, to meet their basic financial needs. The FWC also took into account the recent robustness of the labour market, and that increases to modern award minimum wage rates will provide a disproportionate benefit to female workers and thus may contribute to reducing the aggregate gender pay gap across the workforce.
Although employees will welcome this significant wage increase, this decision places an additional economic burden on employers, and is the highest increase to minimum wages since the commencement of the Fair Work Act 2009.
The increase to the National Minimum Wage and Modern Award minimums will take effect from the first full pay period on or after 1 July 2023.
For workers in the aged care sector, our understanding is that this 5.75% increase will be in addition to the previous 15% wage increase awarded by the FWC which comes into effect on 30 June 2023. See our previous article here for more information.
The FWC has also put all parties on notice in its announcement today that gender equality issues are firmly on the FWC’s agenda and will likely be a significant consideration in the 2023-2024 Annual Wage Review. These comments may be a signal that increases to individual Modern Awards could potentially occur where gender pay inequity and gender undervaluation of work issues are identified.
Finally as with previous years, from 1 July 2023, employers’ minimum superannuation contributions will be increased to 11%.
What Should You Do Now?
Ahead of 1 July 2023, employers should review their wage arrangements and implement the necessary wage and superannuation increases.
Please contact us at email@example.com if you have any questions regarding your minimum pay obligations.