Almost three million Australian workers could see their wages increase by up to five per cent from July 1, as the Fair Work Commission prepares to deliver its latest minimum wage decision amid persistent high inflation.
Fair Work Commission to announce decision
The Fair Work Commission (FWC) will reveal its minimum wage decision on Tuesday at 10am, with expectations of a significant increase above the current inflation rate of 4.2 per cent. Capital Economics' Ben Udy predicted the FWC would deliver a pay rise between 4.5 and 5 per cent.
"We're expecting a minimum wage increase from the Fair Work Commission of 4.5-5 per cent," Mr Udy told Business Now. "That's above inflation and broadly consistent with what the Fair Work Commission has delivered over the last few years."
Recent wage increases
Last year, the FWC lifted the minimum wage by 3.5 per cent when inflation was around three per cent. In previous years, Australians received larger wage bumps: a 3.75 per cent increase in 2024, a 5.75 per cent rise in 2023, and a 4.6 per cent hike in 2022.
The Australian Council of Trade Unions (ACTU) has called for a six per cent minimum wage increase, significantly higher than what many business groups have recommended. The Australian Chamber of Commerce and Industry proposed a 3.5 per cent hike, while AI Group suggested a 3.9 per cent increase.
The ACTU argued that a six per cent pay rise would protect low-paid workers from high inflation and lift the minimum wage to $26.45 per hour. "One in four workers in Australia rely on minimum award wages, particularly those working in hospitality, retail, fast food, administration, and care industries," the ACTU said in a statement.
Inflation and economic impact
Inflation data released on Wednesday showed the headline rate had fallen to 4.2 per cent, still well above the Reserve Bank of Australia's target band of two to three per cent. The Albanese government has called for a real wage increase, meaning it should exceed inflation.
AMP's deputy chief economist Diana Mousina warned that the upcoming wage review could put pressure on already high inflation. "We do get the minimum wage decision due in a few weeks, which not just affects the minimum wage but also awards and enterprise bargaining agreements," she told Business Now. "So if that's more elevated than expected - an above-inflation type increase - that could lift wages growth again, which would be a problem for inflation because that's a huge cost for the average business."
Capital Economics' head of APAC, Marcel Thieliant, described the ACTU's proposed wage hike as "disastrous". "If they're calling for a hike of above inflation this year, that would be disastrous because on our forecast we have inflation averaging five per cent this year," he said earlier in the year. "If they want to beat that, they need to give an extraordinarily large minimum wage hike that would add to this inflationary spiral that we're now seeing."
The decision will affect nearly three million workers and is expected to have broad implications for the Australian economy, particularly in sectors such as hospitality, retail, and care industries.
