Australia: 3.5% boost to the minimum wages - Westpac

Justin Smirk, Research Analyst at Westpac, notes that Australia’s minimum wage was increased to $18.29 per hour, which marks a 3.5% increase.

Key Quotes

“In the year to the March quarter, the WPI was up 2.1% in the year (up from the record low of 1.9%yr in June 2017), but still a surprisingly soft print. Private sector wages were even softer at 2.0%yr.”

“This larger increase again will further help to lift wage inflation but just how much is subject to much debate.”

“The 3.5% increase granted to all award rates of pay so 22.7% of employees will get that increase on July 1. Currently collective agreement wages (37.3% of employees) are running at 2.8% year, however, new agreements are coming in lower at 2.5%yr suggesting that new agreements are dragging the average wage increase for EBAs lower (at least for now).”

“The question is now not only will the rise in the minimum wage flow through to individual contracts, but is the economic environment conducive to a wage acceleration in this sector. We do question as it appears there may be a significant number of employees in this sector that are paid well about the minimum wage, average weekly cash earning for award employees is $822.30 (in May 2016), $1,248.50 for collective agreement employees and $1,447.10 for individual arrangement employees.”