Minimum wage for hospitality workers to rise by $24.30 a week

The Fair Work Commission has lifted the pay of 2.3 million Australian workers, including the lowest paid, by an extra $24.30 a week from next month.

The workers covered by the increase will include those in the hospitality and retail industries.

The decision lifts the national minimum wage by 3.5 per cent, or $18.93 an hour, to $719.20 a week.

The Commission says the increase would not create "undue" inflationary pressure and was "highly unlikely" to have a negative impact on employment.

"However, such an increase will mean an improvement in the real wages of those employees reliant on the national minimum wage and modern award minimum wages and will, absent any negative tax transfer effect, result in an improvement in their living standards," commission president Iain Ross said.

It is the biggest pay rise in at least seven years.

The pay rise falls well short of the $50-per-week sought by unions.

However, it was almost double the below-inflation rise of $12.50 a week that business said was required.

About 200,000 Australians are directly paid the minimum wage.

And a further 2 million workers will also be better off because the rise will flow through to 122 modern award rates.

However, economists were saying it would not boost wages significantly.

"While the minimum wage influences around 20 per cent of the labour market directly, I seriously doubt this development will provide any material lift to Australian average wage growth in the year ahead," Perpetual Investments' head of investment strategy, Matt Sherwood, told Fairfax Media.

According to Reserve Bank of Australia governor Philip Lowe, average annual wages need to rise by 3.5 per cent to achieve average inflation of 2.5 per cent which is the mid-point of the bank's target. 

The last time wages grew that fast was in the third quarter of 2012.

Leon Getler 4th June 2018.