Since July 1st there has been an increase of 3.5% to the minimum wage, meaning that the new national minimum wage will be $18.93 an hour and $719.20 a week. This increase has affected more than 2 million Australians.

This article is for informational purposes only and does not contain or constitute payroll or legal advice. You should not act on this information without seeking professional counsel.

 

Who does the minimum wage increase apply to? The increase applies to employees that get their pay rates from the national minimum wage or a modern award. If an employee is covered by a registered agreement, they would need to check to find out whether the increase affects them. The increase doesn’t affect employees who already get paid more than the minimum wage. Find out more here.

What are the expected effects of the minimum wage increase? Historically, the effects of a minimum wage increase in Australia have been difficult to measure. In an attempt to combat this, the Economic Research Department at the Reserve Bank of Australia hypothesised about the effects of the most recent minimum wage increase, and the findings may surprise you.

 

Approximately 40% of Australians have their wages directly or indirectly affected by the minimum wage increase. The study suggests that the job loss rate actually declines when the minimum wage is increased. It also finds that jobs with larger award rises had a greater increase in hours worked rather than a reduction.  Any potential adverse consequences of a higher minimum wage may affect job seekers, rather than those already employed; though any effects are minimal. Overall, the study finds the increase in minimum wage to have a positive impact.

Changes to penalty rates that affect some retail, hospitality, and pharmacy workers are also now in place. Sunday penalty rates for retail have been reduced by 15% for full and part time, and 10% for casuals. Both hospitality and fast-food Sunday penalty rates for full and part time employees have been reduced by 10%. Russell Zimmerman, the Executive Director of the Australian Retailers Association, believes that as a result of this decrease “we’re expecting to see a large number of retailers start thinking about employing more staff”.

For more information on the changes to penalty rates please click here.

 

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