Millions of Australian workers will receive a 3.75 per cent pay boost under the industrial umpire’s minimum wage decision.

As cost-of-living pressures linger, financial stress continues to mount on the nation’s lowest-paid workers.

But on Monday, the Fair Work Commission handed down a decision that will lift both minimum wages and awards by 3.75 per cent.

About one in five Australian workers, or 2.6 million people, will be affected by the changes.

• Pay boost on the way for millions of Australians

The Fair Work Commission has delivered another real wage increase for low paid workers – this is great news for 2.6 million Australians.

— Tony Burke (@Tony_Burke) June 3, 2024

The decision boosts the minimum adult hourly wage by about $33 a week to $915.91. It kicks in on July 1.

“A primary consideration has been the cost-of-living pressures that modern award-reliant employees – particularly those who are low-paid and live in low-income households – continue to experience,” FWC president Adam Hatcher said.

The decision fell short of the 5 per cent sought by unions, but was above the 2 per cent that employers had wanted.

Treasurer Jim Chalmers welcomed the ruling.

“Today’s 3.75 per cent increase to award minimum wages is a win for 2.6 million workers,” he tweeted.

“Labor’s budget is all about helping people earn more and keep more of what they earn. Strong and sustainable wage growth is part of the solution to cost-of-living pressures, not part of the problem.”

But the National Retail Association expressed disappointment at a decision it said would intensify pressure on struggling businesses, particularly small businesses. The NRA had advocated for the FWC to exercise restraint – “given the current growth rate in retail turnover sits at 1.98 per cent, the lowest in 40 years”.

“This wage increase will only amplify the extreme cost-of-doing business challenges being felt by retail businesses, and many may be forced to reconsider hours of trade, reduce labour, or worse close up shop,” interim CEO Lindsay Carroll said.

“Our recent retail sentiment report shows 84 per cent of Australian businesses expect profitability to be significantly worse over the next year, and the commission’s decision is sure to exacerbate this expectation.”

Earlier, Australian Council of Trade Unions secretary Sally McManus told the ABC she would be happy with a decision “with a four in front of it”.

“We want people on the minimum wages to get a real wage increase. So that means anything above 3.6 per cent – if it has a four in front of it, we will be really happy. Obviously 5 per cent would be great,” she said.

“This is all about making sure people keep up with the cost of living, but a little bit more because they need to catch up. You’ve got to remember people on the minimum wages, they’re the ones who are
feeling it the most with cost-of-living pressures.”

Award & minimum wage workers will get a 3.75% pay increase the first full pay period after 1 July. Added to Labor’s tax cuts that means:
– $2600/year for an entry level retail or hospo worker
– $3200/ year L3 community worker or forklift driver

— Sally McManus (@sallymcmanus) June 3, 2024

Elsewhere, Judo Bank economic adviser Warren Hogan said it was a ““sensible” ruling.

“I think this was an excellent decision from the Fair Work Commission,” he told Sky News Australia.

“It was sensible – 3.75 is actually lower than where I thought they’d be.”

The commission also noted Australians would soon see an increase in their disposable incomes thanks to the stage-three tax cuts and other cost-of-living relief measures included in the federal budget.

Hatcher said an increase to the superannuation guarantee amount, which will also take effect from July 1, would moderate those benefits.

In the 12 months to the March 2024 quarter, prices rose slightly more than expected, with the Australian Bureau of Statistics revealing that the consumer price index had increased 3.6 per cent.

There was a substantial increase to the minimum hourly rate in 2023 – 5.75 per cent for awards and 8.6 per cent for the national minimum – with the commission basing its call on a combination of low unemployment, falling wages and high inflation.

-with AAP