Superannuation guarantee increase tempers Fair Work Commission’s minimum wage decision

The Fair Work Commission has said yesterday’s minimum wage increase was lower than it would have been due to the impending increase in the superannuation guarantee.

While the Council of Small Business of Australia welcomed the smaller rise, some employee groups have still expressed their frustration at what they believe to be an increase higher than many businesses can withstand – while unions have also complained the 2.6% increase does not go far enough.

In yesterday’s announcement, the commission said businesses are preparing for an increase in the superannuation guarantee rate and this acted as a “moderating factor” in the decision.

“As a result, although it would not be appropriate to quantify its effect, the increase in minimum wages we have determined in this review is lower than it otherwise would have been in the absence of the superannuation guarantee increase,” Fair Work Commission president Justice Ross said in a statement.

The minimum wage will rise by $15.80 a week on July 1.

The superannuation guarantee rate will increase to 9.25% on July 1 as well. Businesses have complained for some time the increase will affect businesses’ capability in delivering pay rises – this new admission from the FWC suggests it believes businesses require some leniency.

Peter Strong, executive director of the Council of Small Businesses of Australia, told SmartCompany the decision was a pleasant surprise.

“Many people view superannuation as separate from their actual pay, they don’t understand that it’s part of the package as a whole,” he says.

“It’s good to hear this recognised.”

Not all are pleased. Greens MP Adam Bandt said the commission was wrong in prioritising superannuation payments.

“Australia’s lowest-paid workers need a wage increase now, not some small boost to their super in 30 years,” Bandt told The Australian.

Russell Zimmerman, the executive director of the Australian Retailers Association, told SmartCompany he was disturbed by the comment and noted even though the increase is lower than usual, several small businesses will still have to put up with the higher costs.

“I just don’t think they can stand a big increase,” he says.

The Australian Council of Trade Unions said the increase was “disappointing”.