National Minimum Wage Increases 3.75%

The Fair Work Commission (FWC) Minimum Wage Panel has decided on a 3.75% increase for the national minimum wage and all modern award minimum wage rates, effective from 1 July 2024.

Employer groups had advocated for a 2% increase, equating to a 2.5% rise when factoring in the superannuation guarantee contribution rate hike, also effective from 1 July 2024. Conversely, unions had pushed for a 5% increase.

The new national minimum wage, effective 1 July 2024, will be $915.90 per week or $24.10 per hour.

The FWC’s decision was influenced by several factors:

  1. The Australian economy is projected to achieve a ‘soft landing’ at the end of 2023–2024, avoiding a recession while reducing inflation and maintaining near-full employment.
  2. Wage increases have only recently started to outpace inflation, with annual wage growth surpassing inflation in the past two quarters.
  3. Over the past few years, many workers and households have experienced a decline in disposable incomes.
  4. Despite a 5.75% increase last year, real wages for employees relying on modern awards are lower than they were five years ago.

Additionally, the FWC will review modern awards and classifications for early childhood education, care workers, disability home-care workers, social and community services workers, dental assistants, medical technicians, psychologists, other health professionals, and pharmacists to address issues of gender undervaluation.

This increase in the national minimum wage is significant for your bookkeeping and payroll operations. It necessitates precise adjustments in employee wages to comply with the new rates, ensuring that your business remains legally compliant. Accurate record-keeping and timely payroll updates are essential to avoid any discrepancies or potential penalties. This change also underscores the importance of maintaining up-to-date financial practices to manage cash flow effectively, accommodate wage increases, and support overall financial health. By staying proactive and informed, you can ensure smooth payroll transitions and continued support for your workforce. If you need help with payroll from a professional bookkeeper, contact our team today.

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