Pay rises in Australia used to increase wages by around 3-4% per year but are now idling at around 2% annually. This low rate of wage growth falls well below the rising cost of living. The Australian Council of Trade Unions took a poll this year that found only one in five workers (19.5%) had a pay rise in the past year that covered increases in the cost of living, and approximately half (47.6%) had no pay rise at all.
Why is wage growth so low?
The Reserve Bank of Australia Deputy Governor Guy Debelle has said lack of substantial pay rises are due to business finding creative ways to avoid increasing wages, for example though non-wage incentives. Such incentives include bonuses, flexible work hours, extra hours, additional annual leave, shares, and subsidies on services people can use, such as gyms. Businesses have also linked pay increases to individual performance, instead of regular increases linked to rising cost of living. The Deputy Governor has also said that people are now more reluctant to take a risk and leave their job for a better paying one.
Other reasons may include people refusing to leave their jobs, due to an ageing workforce and the fact that older workers tend to change jobs in search of pay increases less than younger workers. There is also a widening gap between the skills needed in job vacancies and the skills that unemployed workers have. Finally, there are the general issues of increased casualisation, low rates of industrial action and foreign retailers which put pressure on business to keep costs low.
What about the Minimum Wage?
Australia’s National Minimum Wage was established more than a century ago and increased by 3.5% on 1 July 2018 to $18.93 per hour. While this is very welcome, it is also well below the 7.2% increase called for by unions, which would better help with rising costs of living in Australia. Alongside the National Minimum, there is also a detailed system of award wages which elevate the pay you are entitled to, depending on industry, age, skill and qualifications. So, many people are entitled to a higher wage than the National Minimum, but may not know it.
Approximately one quarter of all employees in Australia have their wage set according to a minimum or award wage, and the Reserve Bank has indicated this number is rising. Go to the Fair Work website to find out your Award and minimum pay rate. Additionally, depending on if you are full/part-time or casual, you will be entitled to paid leave, minimum notice requirements if your employment is terminated. It is important to know what wage and benefits you are entitled to, in order to asset your rights.
If you are being under-paid, or have any queries relating to the issues featured in this article, please do not hesitate to contact us on 02 8917 8700 or fill out the enquiry box and we will get back to you ASAP.