The Australian minimum wage will increase by 5.2 per cent to $21.38 an hour from 1 July, in a decision by the Fair Work Commission.

The rise will see minimum wage increase $40 a week to $812.60, while workers on Modern Awards will see an increase of 4.6 per cent unless the minimum wage by the award is less than $869.60, in which case it will increase by a flat $40 per week.

The Australian Retail Association (ARA) called for a rise of 3.2 per cent, which it said took into account the cost pressures businesses are under, while ensuring the wages of frontline workers could keep pace with the rising cost of living.

Paul Zahra, CEO of the ARA, said the increase, the highest in more than two decades, comes during an incredibly challenging economic environment for Australia’s retailers.

“The cost of business is a pressing concern and comes as retailers deal with intense challenges. Acute supply chain issues, staff shortages and the rising cost of energy, fuel and materials is creating unprecedented financial pressure.

“Whilst the ARA supported a fair and balanced increase to the minimum wage, we fear the scale of this increase could tip some businesses over the edge.”

Dominique Lamb, CEO of the National Retail Association (NRA), said the wage increase is completely out of touch with the reality of modern business and will result in many workers losing their jobs.

“This comes on top of two recent interest rate hikes, which will drive up overdraft and business loan payments, and will coincide with the 0.5 per cent jump in superannuation from July 1.

“The simple fact is that when businesses don’t have enough money to cover their expenses, they need to cut costs. There is no doubt that those cuts will lead to job losses in retail and no doubt in other areas of the economy as well.”

The Commission said that the most significant changes since last year’s decision have been the sharp rise in the cost of living and the strengthening labour market.

“The sharp rise in inflation impacts business and workers. The cost of business inputs increases which, depending on the capacity to pass on those costs, adversely impacts profitability. Inflation erodes the real value of workers’ wages and reduces their living standards.

“The low paid are particularly vulnerable in the context of rising inflation,” said the Commission.

The Australian Council of Trade Unions had asked for a 5.5 per cent lift in the national minimum, while a number of employer bodies proposed an increase to minimum wages of between 2.5 and 3 per cent.

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