This means the national minimum wage will rise by 1.75 per cent to $753.80 a week or $19.84 per hour and will be phased in from July 1, the Fair Work Commission announced on Friday.
The rise falls well short of the three per cent increase to the minimum wage last year.
Commission president Justice Iain Ross says it comes amid a significant downturn in Australia’s economy, driven by the coronavirus.
“The shock to the labour market has been unprecedented,” he said in a recorded message released on Friday morning.
There are also significant downside risks to the economy ahead, he said, including the potential threat of a second wave of coronavirus infections.
“The outlook, including the nature and speed of the expected recovery, remains highly uncertain,” he said.
Peak union body the ACTU had argued for a four per cent rise this year.
Business groups had argued the minimum wage should be frozen until mid-2021 to enable people impacted by the coronavirus-driven downturn to find jobs.
The commission’s decision directly affects 2.24 million low-paid workers and indirectly affects many more.
Industrial Relations Minister Christian Porter had opposed any substantial increase to what is already the world’s highest minimum wage.
The pay rise will apply for human services and front line workers from July 1, construction and manufacturing workers from November 1, and arts, retail and hospitality, tourism and aviation sector workers from February 1 next year.
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