Full-time workers on the NMW and the modern award minimum wage will both receive $40 more a week, equating to $21.38 an hour on the NMW and $22.88 an hour for those on the modern award.
The increase of the modern award will impact home care workers on level one, aged care workers on level one or two, nursing assistants (in years one to three) and enrolled student nurses.
Those who are receiving above the modern award minimum wage rate of $869.60 a week will also receive a 4.6 percent adjustment. This will affect home care workers on levels two to five, aged care workers on levels three to seven, and nurses (including experienced nursing assistants, registered nurses, nurse practitioners and occupational health nurses).
The United Workers Union (UWU), a trade union representing industry workers including those in aged care, believe that the minimum wage and award wage increase is good news for millions of workers in Australia.
A UWU spokesperson says, "Unions have continued to demand wage increases for workers in the face of many years of wage stagnation and opposition to wage growth from employers and their lobbyists.
"It’s no surprise the largest increase in years has been delivered under the new Labor Government, who committed to helping workers keep up with rising costs of living during the Election.
"But inflation is now predicted to reach 7 percent by the end of the year which means we could still see many workers' real wages go backwards despite [the] announcement.”
UWU states that pressure on every level of the Government needs to continue to address wage stagnation.
The Australian Council of Trade Unions (ACTU) agrees with UWU that the increase is a good start but more needs to be done to improve wage growth.
Secretary of ACTU, Sally McManus, says, "This Annual Wage Review is one tool we have to generate wage growth, but it only affects one in four workers – we need wage growth across the economy.
"Clearly the current system is failing. It is unable to deliver wage increases despite low unemployment, high productivity and high profits. Working people are feeling the serious consequences of nearly ten years of inaction by the previous Government.
"Our country needs to take a fresh look at this problem and address it. It is not acceptable that working Australians and their families continue to go backwards while big business does so well.
"We cannot be satisfied with a wage-setting process that leaves minimum wage workers living in poverty and delivers real wage cuts for the average worker."
When reviewing the wage case, the Fair Work Commission noted the "sharp rise" in the cost of living since last year's review with inflation rising from 1.1 percent to 5.1 percent.
The Commission believes this inflation will impact workers and their capacity to meet living standards, which is why they were in favour of an increase.
Increases to the modern wage, which come into effect on 1 July 2022, are not related to the current work value case that is before the Fair Work Commission, which is asking for a 25 percent increase to the wages of home care and residential care workers.
Prime Minister Anthony Albanese promised to support the outcome of the Fair Work Commission case for aged care worker wages and new Minister for Aged Care, Anika Wells, wrote to the Commission asking to make a submission to the case.
The Fair Work Commission extended the case timeline so that the new Labor Government could make their own submission. It is expected that this case should conclude in early 2023.
The Health Services Union (HSU), the organisation behind the aged care work value case, says the outcome of the Fair Work decision for a 25 percent wage bump will make the biggest difference for aged care workers.
National President of the HSU, Gerard Hayes, says, "The lift in the minimum wage is a great first step and we are encouraged the Federal Labor Government supported it.
"For the aged care workforce, the real breakthrough will be in the work value wage claim being run by the HSU.
"We are seeking to change the contours of our industry by lifting wages between $5.40 and $7.20 per hour to increase the average wage to $29 per hour."
It was highlighted last year that aged care workers were experiencing a rental crisis and were barely able to afford their homes, and this was followed by a survey in March that found that one in five aged care workers were planning to quit the sector within the year.
Aged care industry worried this change isn't enough
While this wage increase will have a positive effect on aged care workers, peak bodies say there are still more improvements needed to fix issues in the workforce beyond increasing the modern award minimum wage.
The Aged & Community Care Providers Association (ACCPA), new industry peak body, welcomed the Fair Work Commission’s decision but raised concerns over the inadequate indexation of Commonwealth funding that prevents improvements in quality of care.
Interim Chief Executive Officer of ACCPA, Paul Sadler, says that "everyone knows aged care workers need a significant pay increase" but without additional support from the Government, aged care providers will continue to face issues in investing in quality care and finding ways to save money to keep facilities open.
"If we don’t see urgent action the aged care workforce crisis is simply going to translate into other serious problems like increased closures, or offsets in other areas such as training or investment in facilities," explains Mr Sadler.
"A significant wage increase for our workforce is essential to attract new people and improve quality of care to older Australians, but when two-thirds of providers are already running at a loss year-on-year, we need the wage increase to be funded by the Federal Government.
"ACCPA welcomes the Albanese Government’s commitment to fully fund the outcome of the current Fair Work Commission aged care work value case. However, the work value case probably won’t conclude until early 2023, while the minimum wage decision will flow from July 2022."
The Royal Commission into Aged Care Quality and Safety found that the former Government's approach to indexing aged care service funding was inadequate and wasn't covering the real increased cost of providing aged care over the years.
A recommendation was made by the Commission to fix indexation, however, this was one of few recommendations not accepted by the previous Government.
With the recent increase in wages, ACCPA believes the gap has widened further between wages and indexation this year.
In a report from the University of Technology Sydney researchers, Australia’s Aged Care Sector: Mid-Year Report (2021-22), estimated an average deficit of $11.34 per resident per day in residential care.
Mr Sadler says, "To ensure more robust and evidence-based funding can be implemented from July 2023, the Government must also legislate the expansion of the functions of the Independent Health and Hospital Pricing Authority to include aged care, consistent with the Royal Commission’s recommendation on independent pricing.
"We look forward to working with the new [Federal] Government to address this issue and other unfinished business from the Royal Commission."