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Tag: minimum wage

Minimum wage to rise 5.7% from July amid cost of living crisis

Australia’s minimum wage to increase by AUD 1.20 per pour

Australia’s minimum wage is set to rise by AUD 1.20 (USD 0.79) per hour starting from July 1, 2023, benefiting the country’s lowest paid workers. The Fair Work Commission recently announced a 5.75% increase in the National Minimum Wage, raising the hourly pay rate from AUD 21.38 (USD 14.13) to AUD 22.60 (USD 14.94) for these workers.

Additionally, all modern award minimum wage rates will also see a 5.75% increase, effective from the first full pay period on or after July 1, 2023. Modern awards outline the minimum employment conditions and terms beyond the National Employment Standards (NES), including aspects like pay and working hours.

Despite the wage increase, workers will still experience a real wage decrease due to a 6.8% inflation rate over the past year, as of April. The decision by the Fair Work Commission falls between the 3.8% requested by some business groups, such as AiGroup, and the 7% sought by the Australian Council of Trade Unions (ACTU).

More than 20% of Australia’s workforce receives minimum award rates, while 0.7% earn the national minimum wage, which is the lowest rate. Fair Work Commission president Adam Hatcher acknowledged the challenges faced while making the decision, including declining wages, high inflation, and an anticipated economic slowdown.

In determining the wage increase, the commission considered the impact of inflation on the financial well-being of low-paid workers, as well as the upcoming rise in the superannuation guarantee from 10.5% to 11%. The commission also took into account the effects of a weakened job market on casual employees and relevant industries.

The Australian Chamber of Commerce and Industry (ACCI) expressed concerns about the increase, stating that it would impose an AUD 12.6 billion (USD 8.3 billion) wages burden on small and family businesses. ACCI chief executive Andrew McKellar emphasized the negative implications for the 260,000 small and family-owned businesses that pay minimum and award wages, and he criticized the decision for potentially exacerbating high inflation amid a deteriorating economic outlook.

The wage increase fell short of the ACTU’s desired 7% raise. Sally McManus, the secretary of the ACTU, acknowledged that the increases would provide crucial support to millions of working people during the current cost-of-living crisis. She described it as a critical increase that would help these individuals stay afloat.

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Minimum wage increases for interns

Employers offer benefits to emerging talent

According to the National Associate of Colleges and Employers (NACE), the average hourly wage for bachelor’s-level interns from the class of 2020-2021 rose to $20.82.

“The average hourly wage for interns is the highest hourly wage that has been reported,” said Shawn VanDerziel, NACE’s executive director.

He made further comment: “Moreover, it is important to consider the context: The last two summers have been particularly challenging for employers as they grappled with managing their internship programs during a pandemic, but they wanted to remain competitive and raised wages. Our studies show that the market is hot right now for both full-time hires and interns. We expect that hourly wages for summer 2022 interns will reflect that.”

Many employers have reportedly also offered benefits to interns. Examples include planned social activities, offered by 79.0%, and paid holidays, provided by 55.1%. In addition, 23.2% offered their interns 401(k) plans.

VanDerziel said interns also receive work experience that can make them attractive to potential employers.

NACE reported nearly two-thirds of class of 2020 – 2021 interns’ time at work, 36.1%, was spent on a combination of analytical/problem-solving work and 27.3% on project management duties.

In a tight and talent scarce market, the ‘grow your own’ mentality is one that will not only support the retention of staff but will also ensure a solid talent pipeline for growing businesses.

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Lidl to become UK’s highest-paying supermarket

The retailer is on track to open another 1,000 stores

Lidl has announced a pay increase from next year and according to the supermarket chain, the rise in wage will make it the highest paying supermarket in the UK. The supermarket said higher rates will apply to the capital’s workforce. Lidl commented that “entry-level wages will increase from £9.50 to £10.10 an hour outside of London and £10.85 to £11.30 within the M25 from March 2022, with colleagues earning up to £11.40 and £12.25 respectively, depending on length of service.”

The increase represents a pay rise of more than 6% for some and this will benefit more than 80% of its staff. By comparison, the UK’s minimum wage for workers over 23 is set to rise from its current level of £8.91 an hour to £9.50 from April 2022.

It stated that the increase recognised “the hard work and dedication of frontline colleagues during the last 18 months of the pandemic.”

It comes after continued staff shortages in a market where employers are continuing to struggle to fill roles, affecting the hospitality and retail sectors.

Lidl is expanding and currently has more than 850 stores in Great Britain. According to reports it says it’s still on track to increase that to 1,000 by the end of 2023.

Nan Gibson, Lidl’s chief HR officer, commented to the BBC: “We do not expect to pass that on to customers in the form of price rises.” She said it was currently “very difficult” to recruit staff, adding: “We are competing for talent with all the other retailers and, indeed, other industries.”

Ms Gibson said Lidl’s pay rise was intended to retain existing staff “as far as possible”, but also to attract new workers.

Christian Härtnagel, chief executive at Lidl GB, said: “We have ambitious plans to grow our business across Great Britain, and to do that, we need to ensure we attract and look after the best talent at every level of our business.”

 

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Rise in minimum wage isn’t new news

Too many workers have no access to supported training

Chancellor Rishi Sunak confirmed a rise in the National Minimum Wage (NMW) in the autumn budget this week. While the increase was expected, it presents a “double whammy” for employers who are facing this increase at the same next year as the rise in National Insurance.

Richard Maitland, partner at MHA, says the rise is in line with previous annual increases: “The size of the increase to the top rate – the National Living Wage (NLW) – is also around the level we saw prior to the pandemic, although there was a ‘COVID-19 blip’ for the current year when the increase was much smaller.

“To be precise, the increase from April 2020, which had been agreed pre-pandemic, was £0.51 (an hour) and this current proposed increase (April 2022) is £0.59. The rise from April 2021 which did factor in the effect of the pandemic was unusually low, at just £0.19, although at the same time the NLW was extended to 23- and 24-year-olds, whereas previously only those aged 25 and over had been entitled to it.

“For minimum wage employers in sectors such as hospitality, who are very much still feeling the financial pressures of COVID-19, a further increase to their employment costs will be far from welcome.”

An REC spokesperson commented as well: “This rise is a return to the aim of raising the Minimum Wage to two thirds of median average wages by 2024, after a pandemic-inspired slowdown last year. In deciding the rate can get back on path in one year rather than two, the LPC has concluded that the strong pay growth suggested by REC surveys will persist – though this will put pressure on sectors like care and hospitality. The big unanswered question is about progression from lower-paid roles – too many workers are locked out of supported training by the inflexibility of the apprenticeship levy. We need a reformed model, where temporary and flexible workers can do shorter bursts of training that reflect labour market needs and raise their pay.”

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Workers recover £16m in owed pay

In the last year, HMRC assisted more than 155,000 workers across the UK recover more than £16m in wages owed to them. They also issued more than £14m in fines to businesses who did not comply with minimum wage requirements.

Whilst most employers do pay their staff the National Minimum Wage,  HMRC has revealed some of the most ridiculous excuses for businesses not paying the legal minimum:

1. “She does not deserve the National Minimum Wage because she only makes the teas and sweeps the floors.”

2. “The employee was not a good worker, so I did not think they deserved to be paid the National Minimum Wage.”
3. “My accountant and I speak a different language – he does not understand me, and that is why he does not pay my workers the correct wages.”
4. “My employee is still learning so they are not entitled to the National Minimum Wage.”
5. “It is part of UK culture not to pay young workers for the first three months as they have to prove their ‘worth’ first.”
6. “The National Minimum Wage does not apply to my business.”
7. “I have got an agreement with my workers that I will not pay them the National Minimum Wage; they understand, and they even signed a contract to this effect.”
8. “I thought it was okay to pay young workers below the National Minimum Wage as they are not British and therefore do not have the right to be paid it.”
9. “My workers like to think of themselves as being self-employed and the National Minimum Wage does not apply to people who work for themselves.”
10. “My workers are often just on standby when there are no customers in the shop; I only pay them for when they are actually serving someone.”
Steve Timewell, Director Individuals and Small Business Compliance, HMRC, said: “This list shows some of the excuses provided to our enforcement officers by less scrupulous businesses. Being underpaid is no joke for workers, so we always apply the law and take action. Workers cannot be asked or told to sign-away their rights. We are making sure that workers are being paid what they are entitled to and, as the economy reopens, reminding employers of the rules and the help that is available to them.”
Photo courtesy of Unsplash.com
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