The Fair Work Commission has increased the national minimum wage by 3%, a decision that affects about 21% of the workforce.

The decision, which takes effect on July 1, means that the new minimum wage will be:

  • $19.50 per hour
  • $741 per week
  • $38,522 per year

Last year, the FWC increased the minimum wage by 3.5%. Inflation is currently running at 1.3%.

This year’s decision was influenced by Australia’s “strong labour market” and the fact the economy has performed “moderately well”, according to the FWC.

“We have decided to award a lower increase this year than that awarded last year having regard to the changes in the economic environment (in particular the recent fall in GDP growth and the drop in inflation) and the tax-transfer changes which have taken effect in the current review period and which have provided a benefit to low-paid households,” the FWC said.

“We are satisfied that the level of increase we have decided upon will not lead to any adverse inflationary outcome and nor will it have any measurable negative impact on employment.

“However, such an increase will mean an improvement in real wages for those employees who are reliant on the national minimum wage and modern award minimum wages and an improvement in their living standards.”

Small business ombudsman Kate Carnell said the FWC had acted independently, with a panel of experts assessing all relevant viewpoints and data.

“It’s critical that this decision-making process remains independent and is kept out of the hands of politicians or those with a vested interest,” she said.

“The decision to pay Australia’s 2.2 million award-dependent workers an extra $21.60 per week from July 1 fell well short of the $43 per week the Australian Council of Trade Unions lobbied for, but was also more than the 2% business groups wanted.

“Australia already has one of the highest minimum wages in the world. The increase awarded exceeds inflation and that will impact small businesses, many of which are doing it tough right now.

“But it’s important to respect the independent role of the Fair Work Commission.”