The Fair Work Commission (FWC) has approved a 5.2% increase in the minimum wage, explaining that the lowest paid workers in the economy are “particularly vulnerable” due to the sharply rising cost of living, especially for basic food items.
Since the last minimum wage review last year, inflation has risen from 1.1% to 5.1%.
The FWC also said the tight labour market was a factor in the decision. Unemployment has fallen from 5.5% to 3.9% over the year.
The minimum wage will increase to $21.38 an hour or $812.60 per week.
There are approximately 2.7 million on award and minimum wages who will be affected by the change, which is likely to take effect from 1 July 2022.
The decision will flow through to personal care workers in aged care, while other aged care workers will be covered by the work value case currently before the FWC.
Unions had proposed a 5.5% increase in the minimum wage due to rising inflation, while business groups had put forward rises of between 2.5% and 3%.
The government made a submission to the FWC appealing for the real wages of the lowest-paid workers in the economy to remain in line with inflation, and not go backwards.
“The low paid are particularly vulnerable in the context of rising inflation,” the FWC said in its statement.
Pay rises for aged care workers affected by today’s decision will have to be funded by the government, says Grant Corderoy of aged care accountancy specialists StewartBrown.
StewartBrown’s latest research shows that 56% of aged care homes are currently operating at a loss.
The FWC’s review of the value of aged care work was recently extended to make time for the new government to make a submission. Unions are calling for a 25% pay rise for aged care workers.
During the election, Labor promised to fund the outcome of the FWC case.
In one of the government’s first acts in power, Aged Care Minister Anika Wells and Health Minister Mark Butler wrote to the FWC requesting extra time to contribute to the case.
Both ministers have made public comments in support of higher wages for aged care workers.
Minister Butler said the current low wages paid to aged care workers are “not fair” and “not sustainable”.
“If we’re going to get the number of aged care workers, nurses, carers and other workers we need today, but particularly are going to need into the future as our population continues to age.”
The FWC will hold hearings for the aged care workers’ work value case in August. A decision is expected in October.
Anton Hutchinson, whose family has owned and operated Canberra Aged Care for more than 30 years, echoed Corderoy’s comments that the government will have to fund higher wages for aged care workers.
He told HelloCare low-care facilities will be worse off under the AN-ACC funding model and only the highest needs residents will receive the government’s often quoted “starting price” of $216.80.
It remains to be seen if today’s increase will be viewed as a first tranche of the unions’ call for a 25% pay rise for aged care workers, or if there will be calls for the increase to be on top of the gain.