Australia hikes national minimum wage by 3.5pc

SYDNEY: Australia’s industrial relations umpire has raised the national minimum wage by 3.5 per cent from July 1, it said yesterday , an increase almost double the current industry rate but half what unions had lobbied for.

The A$24.30 (RM73.10) per week hike will be welcomed by central bank policymakers who want to see a pick-up in wage growth and inflation before they normalise interest rates from the current record low 1.50 per cent.

Yesterday’s move affects about 2.3 million employees but was opposed by business groups, which argued that higher pay awards would kill jobs.

The Fair Work Commission, Australia’s labour regulator, said Reserve Bank of Australia (RBA) research had convinced the commission that “modest and regular minimum wage increases” did not reduce employment levels.

While yesterday’s announcement would help workers on low incomes and support anaemic consumption growth, it was unlikely to boost average wage growth in the country, said economists.

“Wage growth has bottomed at two per cent, but outside of sectors like construction and infrastructure there is scant evidence of accelerating wage growth,” said Matt Sherwood, head of investment strategy at Perpetual Investments.

The RBA last cut rates in August 2016, making the current stretch of stable rates the longest on record.

RBA governor Philip Lowe recently said average annual wages needed to rise by 3.5 per cent to achieve average inflation of 2.5 per cent, the mid-point of the bank’s target.

The last time wages grew as fast as 3.5 per cent was in the third quarter of 2012.

The RBA has been loath to heed its own recommendation, with employees at its note-printing subsidiary calling a strike last week to demand a 3.5 per cent pay rise, rather than the two per cent it was offering.