Increases to the Modern Award and Minimum Wage in Australia 

The Fair Work Commission (FWC) has announced that the national minimum wage and modern award minimum wages will increase by 5.75% from 1 July 2023. This is the highest increase in the minimum wage since 2009. 

The decision was made after the FWC considered a range of factors, including the current economic conditions, the cost of living, and the need to maintain a fair and equitable workplace. 

The increase in the minimum wage will benefit around 2.75 million Australian workers. It is estimated that the average worker will receive a pay rise of $70.20 per week, or $3,612 per year. 

The increase in the minimum wage is a welcome boost for low-paid workers. However, it is important to note that the cost of living is also rising. This means that the increase in the minimum wage may not be enough to offset the rising cost of living for some workers. 

Businesses will also need to factor in the increase in the minimum wage when setting their budgets. The increase in the minimum wage could lead to higher prices for goods and services. 

Overall, the increase in the minimum wage is a positive development for low-paid workers. However, it is important to be aware of the potential impact on the cost of living and businesses. 

It also means for those businesses that pay above award wages, need to check that their employees are still better off overall after the increase. 

What does this mean for businesses?

The increase in the minimum wage will have a number of implications for businesses, including: 

• Higher labour costs: Businesses will need to pay their employees more, which will lead to higher labour costs. 
• Increased prices: Businesses may need to increase their prices to cover the higher labour costs. 
• Reduced profits: The higher labour costs could lead to reduced profits for businesses. 

What can businesses do to mitigate the impact of the increase in the minimum wage? 

• Review their staffing levels: Businesses may need to review their staffing levels to ensure that they are not overstaffed. 
• Automate tasks: Businesses may be able to automate some tasks to reduce the need for manual labour.
• Outsource work: Businesses may be able to outsource some work to reduce their labour costs.
• Increase productivity: Businesses may be able to increase productivity by investing in new technology or training their employees.

The increase in the minimum wage is a challenge for businesses, but there are a number of things that businesses can do to mitigate the impact. By taking proactive steps, businesses can ensure that they are prepared for the increase in the minimum wage and that they can continue to operate successfully. 

Here are some additional tips for businesses: 

• Communicate with your employees: Let your employees know about the increase in the minimum wage and how it will affect their pay. 
• Be transparent about your costs: If your prices need to increase, be transparent with your customers about why. 
• Invest in your employees: Training and development can help your employees be more productive and earn higher wages. 
• Work with your employees: If you are facing financial challenges, work with your employees to find ways to reduce costs. 
• Review existing pay rates to the awards and to market value. 

Minimum Wage Increase: The Bottom Line

The increase in the minimum wage is a change for businesses, but it is an opportunity to invest in your employees and create a more sustainable business in the long term. It’s also the opportunity to review your wage compliance and ensure that you remain not only compliant but competitive too.

If you need help with this then please reach out to Now Actually Human Resources and we can work through a strategy with you.