A view of the Central Business District and surrounding city is seen from the Sydney Tower Eye observation deck as the state of New South Wales continues to report low numbers for new daily cases of the coronavirus disease (COVID-19), in Sydney, Australia, August 28, 2020. REUTERS/Loren Elliott

SYDNEY, June 15 (Reuters) – Australia’s independent wage-setting body on Wednesday raised the national minimum wage by 5.2%, largely in line with inflation, bringing respite to families tackling soaring living costs and higher energy prices.

The lowest-paid employees will receive A$21.38 ($14.74) an hour from July 1, up from the current rate of A$20.33, the Fair Work Commission said after its annual review, a decision which it said would affect more than 2 million workers.

“The low-paid are particularly vulnerable in the context of rising inflation,” said Justice Iain Ross, president of the Fair Work Commission, pointing to “a sharp rise” in living costs and possible further rise in inflation for the decision.

With the unemployment rate at 3.9%, the lowest in almost 50 years, Ross said the decision “will not have a significant adverse effect on the performance and competitiveness of the national economy.”

Prime Minister Anthony Albanese this month sought to ensure real wages did not go back. The new centre-left Labor government, during its election campaign, backed an inflation-matching 5.1% rise in minimum wages. read more

Reserve Bank of Australia Governor Philip Lowe on Tuesday said consumer price inflation was now likely to reach 7% by the end of the year, from the current pace. read more

Trade unionists said they were “really happy” describing the decision as “reasonable and fair” while businesses warned the hike in wages would put more strain on operations and was a “significant risk to economy.”

Unions were seeking a 5.5% rise in wages, while businesses recommended an increase in the 2.5-3% range.

Australian Chamber of Commerce and Industry (ACCI) said the decision would add about A$8 billion in expenses for businesses over the year, which are already under pressure from a spike in input costs and a tightening labour market.

“(The wage hike) veers very much towards the upper end of the range of possible outcomes that we could have expected,” ACCI chief executive Andrew McKellar said.

($1 = 1.4514 Australian dollars)

Reporting by Renju Jose; Editing by Himani Sarkar and Sam Holmes

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