Minimum wage increase fails to erase post-pandemic losses

Sydney, Australia - Feb 8, 2015: Pitt St Mall in the middle of a busy day in Sydney CBD on February 8th, 2015.

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Today’s 3.75% increase in the national minimum wage and Modern Awards provides a badly needed income boost for Australia’s lowest-paid workers, and will help to prevent a possible recession by supporting stronger consumer spending.

However, it barely keeps up with inflation and fails to repair the loss in real purchasing power experienced by most Award-covered workers in recent years.

The price of necessities such as housing, energy and food have increased faster than average inflation, causing real incomes for low-wage workers – who spend more of their income on those essentials – to fall further.

Research from the Centre for Future Work shows the real value of most Award wages has lagged behind inflation since 2021 – losing about 4% of purchasing power in that time. It also found an increase of between 5% and 10% was required to keep up with current inflation and undo that past damage.

“Today’s decision, in light of current inflation forecasts, means real wages for Award-covered workers will not change much in the year ahead,” said Dr Fiona MacDonald Policy Director, Industrial and Social at the Centre for Future Work.

“It locks in the recent decline in living standards for Award-covered workers, making it harder for them to manage the challenges of housing prices, insecure work and a weakening economy.

“While the painful reality of lower real wages was acknowledged by the Fair Work Commission in announcing its wage award, its decision does not begin to repair this problem.

“Minimum-wage and Award-covered workers are especially vulnerable to current cost-of-living challenges. It is vital that they are supported in recovering the real incomes they have lost.

“As expected, the Commission also confirmed its plans to move forward with addressing gendered inequality, mostly in areas where trade unions are already proceeding through work value cases and supported bargaining.”

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