By Catherine Ngo Senior Editor and Content Writer, My Business

KEY TAKEAWAYS 

  • In short, the Fair Work Commission has increased the minimum and award wages by 3.75 per cent. 
  • This decision will increase the national minimum wage to $24.10 per hour or $913.91 per week for a 38-hour workweek. 
  • The change will become effective on 1 July.

The Commission conducts the Annual Wage Review (AWR) each year to assess whether the National Minimum Wage and the minimum pay rates specified in modern awards should be increased. This review typically takes place between March and June. Any adjustments usually become effective on 1 July.

Here is what to expect for 2024:

NATIONAL MINIMUM WAGE INCREASE

The National Minimum Wage will increase by 3.75% starting on 1 July 2024. The new wage will be $915.90 per week or $24.10 per hour. The latest National Minimum Wage will apply from the first full pay period on or after 1 July 2024. If a weekly pay period begins on a Wednesday, the new rates will apply from 3 July 2024. 

The National Minimum Wage applies to employees not covered by an award or registered agreement.

AWARD MINIMUM WAGE INCREASE

The Commission has announced that minimum award wages will increase by 3.75%. This increase will apply from the first full pay period starting on or after 1 July 2024. If your weekly pay period begins on Wednesday, the new rates will apply from Wednesday, 3 July 2024.

Most employees are covered by an award. Awards are legal documents that outline minimum pay rates and conditions of employment in an industry or occupation.

Effective 1 July 2024, the Fair Work Commission has approved a 3.75 per cent increase in the national minimum wage and all modern award minimum wage rates.

In addition, the Commission has scheduled a 0.5 per cent increase in the Superannuation Guarantee Rate, bringing the total wage increase for businesses to 4.25 per cent, according to the Australian Retailers Association.

While acknowledging the importance of aligning wages with inflation, ARA CEO Paul Zahra emphasises the delicate balance needed to ensure sustainable business operations. He warns that Monday's announcement will pressure struggling retailers, particularly small businesses.

Zahra expresses concern that wage increases without corresponding productivity improvements could lead to price increases, given the slowdown in discretionary spending and rising operating costs.

The National Retail Association (NRA) expressed disappointment over the wage hike, claiming it had urged the Commission to exercise restraint due to the current low retail turnover growth rate of 1.98 percent, the lowest in 40 years.

Interim CEO Lindsay Carroll highlights that 78 per cent of retailers identified wage costs as a significant constraint to their business success in 2024. She warns that the wage increase may force retailers to reduce trading hours, cut labour, or even close their doors.

Carroll calls on the Federal Government to consult more closely with the industry on future policy decisions to avoid exacerbating retailers' challenges.

The Fair Work Commission cited cost-of-living pressures as a key factor in the 3.75 percent minimum wage increase. It acknowledged that low-paid and low-income household employees reliant on modern awards continue to experience financial stress.

However, the Commission considered that the inflation rate is lower than last year and that modern award minimum wages, in real terms, are still lower than five years ago. It also considered broader labour market and business profit growth but recognised that some industry sectors with a large proportion of modern-award-reliant employees face a less optimistic outlook.

The Commission also noted that modern-award-reliant employees would soon benefit from Stage 3 tax cuts and Budget cost-of-living measures, which are expected to increase real household disposable incomes over the next 12 months.

WHAT EMPLOYERS CAN DO NOW?

The Fair Work Commissions website will update the new pay rates from 1 July 2024.

In the meantime, if you get stuck, you can call the Workplace Advice Line team for support at 1800 505 529 (9am to 5pm AEDT).

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Catherine Ngo Senior Editor and Content Writer, My Business

Catherine is passionate about unravelling the latest news and insights to help entrepreneurs, small business owners and employers.