Some of the Illawarra's lowest paid workers have welcomed the Fair Work Commission's decision to lift the minimum wage by 5.2 per cent.
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Aged care worker Shellee Gibson said workmates gathered around a TV at their workplace to see the announcement.
"It's nice to hear something good happen, " she said. "$40 a week, everyone says that's a good thing, but it's half a tank of petrol."
In addition to a rise in the minimum wage, the Fair Work Commission also lifted modern award minimum wages by 4.6 per cent or $40 a week, whichever is higher.
The pay rise will flow through to worker's pay checks from July 1, except those in the hospitality, tourism and aviation sectors, which the Fair Work Commission acknowledged were particularly affected by COVID-19 restrictions and delayed the wage rise until October 1.
University of Wollongong Associate Professor Martin O'Brien said the wage rise was greater than what was predicted.
"It's definitely on the higher side, compared to what most people would have thought," he said.
Professor O'Brien said the decision was based off the high inflation figures and low unemployment.
While national secretary of the Australian Council of Trade Unions Sally McManus hailed the wage rise as a win for workers, employer groups were more mixed, with the Australian Chamber of Commerce and Industry saying some businesses will go bust.
"The reality is many small businesses do not have the resources to absorb extra costs," Australian Chamber of Commerce and Industry chief executive Andrew McKellar said.
However, Warrigal chief financial officer Ben Marsh said the aged care provider welcomed the pay rise as addressing the pressures aged care staff were under.
"We're always supportive of anything that would improve the opportunities for our staff to receive fair pay," he said.
The aged care sector in particular has been pushing for a greater increase in pay, with unions and providers pushing for a 25 per cent increase.
For now, Mr Marsh said, the five per cent increase would be a short-term relief.
"This five per cent for the lower paid workers, goes partway to addressing some of those issues, but given the rate of inflation, it is probably just holding their own."
Ms Gibson agreed, noting that pay was only part of the equation.
"What everyone is saying around here is 'I'll stay back and that'll cover the petrol.' When you go grocery shopping, you're only buying half of what you usually buy, picking things that are on sale, or just putting things back."
Professor O'Brien said the wage decision would mean that money would start to flow into the pockets of workers, without leading to an inflation price spiral.
"It's hard to argue that [an increase in the minimum wage] is going to directly increase inflation. Increasing the wage of the lowest paid workers, who tend to spend most of their income, would have a positive stimulus effect on the economy," he said.
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