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Justin Smirk, Research Analyst at Westpac, notes that Australia’s minimum wage was increased to $18.29 per hour, which marks a 3.5% increase.

Key Quotes

“In the year to the March quarter, the WPI was up 2.1% in the year (up from the record low of 1.9%yr in June 2017), but still a surprisingly soft print. Private sector wages were even softer at 2.0%yr.”

“This larger increase again will further help to lift wage inflation but just how much is subject to much debate.”

“The 3.5% increase granted to all award rates of pay so 22.7% of employees will get that increase on July 1. Currently collective agreement wages (37.3% of employees) are running at 2.8% year, however, new agreements are coming in lower at 2.5%yr suggesting that new agreements are dragging the average wage increase for EBAs lower (at least for now).”

“The question is now not only will the rise in the minimum wage flow through to individual contracts, but is the economic environment conducive to a wage acceleration in this sector. We do question as it appears there may be a significant number of employees in this sector that are paid well about the minimum wage, average weekly cash earning for award employees is $822.30 (in May 2016), $1,248.50 for collective agreement employees and $1,447.10 for individual arrangement employees.”