A note from Andrew Kay, CEO of the South Australian Business Chamber
The Fair Work Commission’s decision to increase the National Minimum Wages and Modern Awards by 3.5% is of concern for South Australian businesses already grappling with rising operating costs.
This decision means that minimum wages in Australia will increase to $24.95 per hour or $948.00 per week, effective from the first full pay period on or after 1 July 2025, representing a 3.5% increase, applying to all private sector businesses, i.e. national system employers.
The announced increase to the award is yet another cost impost on business that is well above the inflation rate. Like costs relating to gas, electricity, insurance, rent and most inputs that have grown exponentially in recent years, it will further erode business profitability. Passing on these cost increases remains challenging while the economy is still suppressed.
An Australian Chamber of Commerce and Industry submission earlier in the year, supported by the South Australian Business Chamber, recommended a fair and responsible increase of 2.5%. This recommendation considered the economic environment, the needs of workers, cost of living pressures, as well as the high costs of doing business.
Australia’s flagging productivity has been well documented, with average annual growth barely registering. We acknowledge that the Fair Work Commission had noted this stagnant growth, but we are also concerned that today’s decision is based on future productivity improvements that are yet to be realised.
While the Chamber supports reasonable and sustainable pay increases, a hike higher than inflation poses further challenges to Australia’s economic recovery efforts, at a time when profits are contracting and business investment is falling.
Do you know what to do and how to apply increases?
Join our FREE webinar and hear from our resident Industrial Relations experts Elisa Luck and Kathryn Rees who will cover all things related to the Annual Wage Review.
