Jobs will be at risk and businesses squeezed across NSW after the Federal Government announced the biggest National Minimum Wage increase in more than 30 years – a massive 8.6 per cent.

The Fair Work Commission today announced that both the Minimum Wage and Modern Award Rates have increased by 5.75 per cent – representing the biggest jump in minimum wages in the past decade.

However, because of technical changes in the way the National Minimum Wage is aligned, the effective increase for the National Minimum Wage is actually 8.6 per cent.  

Business NSW CEO Daniel Hunter estimates today’s ruling equates to around a $4.6 billion increase in annual costs to NSW businesses.

“This large wage increase comes at a time when a growing proportion of businesses (about one in four employers) have indicated to us that they will shed staff in the next three months,” Mr Hunter said.

“Businesses are already tackling interest rate hikes, inflation, labour supply problems, energy price spikes, insurance cost spirals and other pressures.

“Business confidence also remains low, according to the Business Conditions Survey. This, combined with falling productivity levels, make now a bad time to be increasing wages by such a significant amount.”

These changes result in the National Minimum Wage increasing from $812.60 per week or $21.38 per hour to $882.80 per week or $23.23 per hour, an increase of more than 8.6 per cent.

This is in addition to the 0.5 per cent increase in the Superannuation Guarantee from 1 July.

“This wage increase will be inflationary because business profit margins are completely squeezed already,” Mr Hunter said.

“Enterprises will have no choice but to pass on the increases to consumers.

“This will increase the likelihood for further interest rate rises. There have been 11 interest rate rises since May 2022.

“According to Business NSW’s election survey in February this year, one in three businesses say they will close their doors if business conditions do not improve.”

Business NSW urged the Commission to implement a more moderate increase of 3.5 per cent for the 2023 year, plus a 0.5 per cent superannuation guarantee.

However, the Commission ultimately landed on a significantly higher figure that will now be applied.

It will take effect on the commencement of the first full pay period following 1 July 2023.

The raise is higher than last year’s 5.2 per cent increase in National Minimum Wage and 4.6 per cent jump in modern award minimum wage rates.

Healthcare and social assistance and accommodation and food services are set to be the most affected by this change.

Newcastle and Illawarra are the NSW regions most reliant on these two sectors.  

New Federal Minimum Wage

The National Minimum Wage increasing from $812.60 per week or $21.38 per hour to $882.80 per week or $23.23 per hour, an increase of more than 8.6 per cent.

Casual award/agreement free employees are also covered by a default casual loading which remains at 25 per cent.