Australia had the highest minimum wage in the world (again) in 2020

Australia had the highest minimum wage in the world in 2020, based on the OECD’s global comparison of minimum wages for all countries that have a national minimum wage[1].

How much was Australia’s Minimum Wage in 2020?

Australia’s minimum wage is the legal minimum pay rate per hour that must be paid to all adult employees (aged 21 years or older). It is set by the Fair Work Commission (FWC) and is reviewed annually. In Australian dollars, Australia’s minimum wage was $19.84 per hour from 1 July 2020, increasing to $20.33 from 1 July 2021.

For international comparison purposes, Australia’s minimum wage was $12.88 per hour in 2020, when adjusted by the OECD on a ‘purchasing power parity’ (PPP) basis in 2020 US dollars. This method standardises the wage rates and reflects differences in the cost of living and pricing levels in each country.

On this basis, Australia had the highest minimum wage globally in 2019 and again in 2020. Prior to 2019, Australia had been neck and neck with Luxembourg and France for the world’s highest minimum wage. Australia also had the highest minimum wage globally in 2000, 2004 and 2007. These data indicate that workers who earn Australia’s minimum wage can afford more with their pre-tax pay packet than minimum wage earners anywhere else in the world.

How much was the Minimum Wage in other countries?

In 2020, the OECD compared minimum wages across 32 countries. The number of countries is relatively small because not all countries have a national minimum wage. Even among high-income and highly developed countries, some have state, regional or industry-based minimum wages or centralised agreement systems that ensure that minimum payments and employment conditions are met, but do not have a single legislated or statutory national minimum pay rate[2].

In the data visualisation below, you can select up to five countries to compare their minimum wages over time, on a PPP basis. Australia has been in the top three countries for the highest minimum wages globally since at least 1985, when the current OECD Australian data series commenced.

How much is Australia’s Minimum Wage in 2021?

From 1 July 2021, Australia’s minimum wage increased by 2.5% to $20.33 per hour, or $772.60 for a full-time adult employee’s 38-hour week. This is a pre-tax base rate for permanent employees. It does not include casual work loadings, overtime and other penalty rates, superannuation payments or any other labour on-costs paid by the employer. This increase will be applied to various industry awards at different dates during the 2021-22 financial year.

How many Australian workers are paid the minimum wage?

The FWC estimates that 180,200 employees (1.7% of all Australian employees) were paid according to the adult minimum wage rate with no other awards or agreements governing their pay and conditions in 2019. Permanent employees are paid the minimum wage rate, with permanent part-time employees paid on a pro-rata hourly basis. Casual employees are paid the minimum wage rate plus a ‘casual loading’ of at least 25% of the minimum wage, as specified in the FWC’s minimum wage determination and in most modern awards.

Australia also has a detailed system of industrial award-based wages that are layered on top of the national minimum wage. This complexity is in contrast with other countries with minimum wage rates, which tend to have only a single minimum wage for all industries. A further 19% of Australian employees, or 2 million workers, are paid at ‘minimum wage rates’ that are set by a modern award with reference to the statutory minimum wage (typically set as equal to or a multiple of the minimum wage).

Many other non-award workers are employed through enterprise agreements covering all employees in their workplace or individual agreements made with their employer. These agreements can also include pay calculations that are based in the minimum wage (e.g. the same annual pay increase or a multiple of it).

It is estimated that in total, pay rates for 40% of all Australian employees are directly or indirectly affected by the Fair Work Commission’s annual wage review.

[1] The OECD compares pre-tax minimum wage rates by first deflating the minimum wage price in each country by the national Consumer Price Index (CPI) in each country. The data are then converted into a common currency unit using US $ Purchasing Power Parities (PPPs) for private consumption expenditures. This method provides a standard comparable measure that reflects differences in pricing levels and average costs of living in each country, excluding the effects of taxation and government transfer payments.

[2] The OECD data do not include Finland, Sweden, Denmark, Norway, Iceland, Austria, Switzerland and Italy as these countries do not have a national minimum wage. These countries instead provide the equivalent of a ‘minimum wage’ protection through their collective bargaining and agreements systems

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Andy joined Ai Group as an Economist in 2017. He is responsible for analysis and commentary on Australian and international economic developments. Prior to joining Ai Group he worked for the Commonwealth Department of Industry, Innovation and Science and for a private economic consulting firm in Brisbane. He holds a Bachelor of Economics and Finance from the University of Queensland.

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