Government strikes minimum wage boost

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"Our consideration of the worldwide research on the impact of increases in minimum wages on employment, particularly the United Kingdom research, has fortified our view that modest and regular wage increases do not result in disemployment effects", Justice Ross said.

"The cost of living is going up, wages are already flat, company profits are at record levels and still, our system does not deliver a pay rise that lifts people out of poverty".

"Moderate increases in minimum wages are seen everywhere to have very low or no negative employment impacts". The new national minimum wage will soon be $694.90 per week.

Restaurant & Catering Australia (R&CA) says the Fair Work Commission (FWC) decision to increase the minimum wage by 3.3 percent will put growth in the hospitality sector at risk.

Justice Ross said the FWC expert panel acknowledged the increase will not lift all award-reliant employees out of poverty, particularly those households with dependent children and a single-wage earner.

"Excessive increases in minimum wages are likely to reduce employment in award-reliant industries", the government said, "particularly for youth, and especially when wages growth elsewhere in the economy remains moderate and inflation is low".

"That research also suggests that the panel's past assessment of what constitutes a "modest" increase may have been overly cautious, in terms of its assessed disemployment effects".

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"If the Fair Work Commission truly believed there would be little or no employment impact, then they've missed a chance to go big with the minimum wage increase".

This announcement comes fresh off the commission ruling that cuts to Sunday penalty rates will be phased in over the next three to four years.

Business groups had been pushing for "caution and restraint", with the Australian Industry Group hoping for a more modest increase of 1.5 per cent, or $10 a week.

Approximately 2.3 million Australians rely on the minimum wage, according to the Fair Work Commission.

The changes will come into effect from July 1, 2017.

In a statement released by Russell Zimmerman, Australian Retailers Association (ARA) executive director, said "Australian retailers are already facing a complex operating environment" and that "this increase will be extremely harmful to the growth and stability of the Australian retail industry". They won't even get this increase because of this penalty rates cut.