Almost 3 million of Australia's lowest-paid workers will receive a 4.75% pay rise from July 1, following the Fair Work Commission's annual decision on award wages. Around 100,000 of the very lowest-paid employees, on entry-level and minimum pay, were granted an almost 6% increase as rising inflation left some unable to pay their bills.
However, the commission's expert panel acknowledged that even after these pay rises, low-paid workers will still earn less in real terms than they did five years ago, when inflation spiked towards the end of the COVID-19 pandemic. Data included in the panel's decision shows that inflation has risen faster than wages since June 2021, resulting in a real wage cut of 5.9% for average earners.
Who benefits from this decision
Announcing the wage rises, Justice Adam Hatcher described this as a "particularly challenging" decision, especially due to the "wild card of the Middle East conflict" and its ongoing price shocks on fuel and other goods. The expert panel stated: "We have concluded, regrettably, that it would not be practicable or responsible in the current uncertain circumstances to award a real wage increase for employees reliant on modern award wage rates that would be sufficient to close the real wage gap entirely."
The wage increase will have the biggest impact on women, part-time, and casual workers. More than 60% of the lowest-paid workers are women, with an average age of 34, and over 70% work part-time. They are predominantly employed in four industries: accommodation and food services, health care and social assistance, retail, and administrative and support services.
A 6% rise for the very lowest paid
Around 100,000 of the lowest-paid workers will receive a 5.97% pay rise. From July 1, the national minimum wage will increase from $24.95 per hour to $26.44, or from $948 per week to $1,004.90 per week. For those starting in entry-level jobs, the lowest award rate for the first six months will rise to $25.74 per hour, or $978.10 per week. The panel indicated that these increases for the lowest-paid 100,000 workers will be followed by two more rises in coming years.
Future wage rises coming for others
The expert panel plans to do more to close the gender pay gap in female-dominated professions. Over the next few years, this will mean phased-in wage increases for children's services employees, dental assistants, pathologists, disability home care workers, pharmacists, and some other health professionals. Nurses and flight attendants' pay will also be examined over the next year.
Why wages are struggling to keep up
The expert panel stated they did not want people to go backwards as inflation continues to rise, so they chose a 4.75% rise to at least maintain people's buying power at the level it was a year ago. However, calculations using their own figures show that this has not happened. Each year, the panel sets rates for around 21% of Australian workers across more than 120 different "awards," which set out minimum terms and conditions of employment. As a key reference point, the panel looks at the "C10 classification": the award rate of pay for an entry-level tradesperson in manufacturing.
Data from the decision shows that inflation has continued to climb faster than the wages of an entry-level tradie and someone on the national minimum wage. This is because inflation can rise all year, but award wages only increase once a year, creating a significant fall in people's real purchasing power between wage increases. Last year, the panel noted that this resulted in a 14.4% drop in real earnings power for someone on an average award from June 2021 to June 2025.
How does the wage rise compare to inflation?
Inflation was lower than expected last month, partly due to fuel discounts that started in April to offset higher oil prices. Those discounts are set to end on June 30. The monthly consumer price index (CPI) rose 4.2% in the 12 months to April 2026, down from 4.6% in March. Treasury forecast inflation would peak around 5% in the middle of this year, driven higher by the Middle East war. That is more than the 4.75% award wage rise. However, if the war ends and global oil prices ease, inflation is forecast to halve by mid-next year to 2.5%, back within the Reserve Bank's target band of 2–3%. This would take pressure off the bank to keep lifting interest rates, which it has done three times already this year. But Treasury also considered a worst-case scenario: if the war drags on and oil prices rise from around US$100 a barrel to US$200, inflation could peak at 7.25% at the end of this year.
What it means for rates and the wealth gap
On balance, this year's wage decision was conservative, as the expert panel acknowledged by saying they regretted not lifting wages more. This decision should not add pressure on the Reserve Bank to lift interest rates at its next meeting on June 15-16. Low and middle-income earners have not caused Australia's economic problems and are not prime contributors to inflationary pressures. Just days ago, the Australian Financial Review's latest Rich List reported that Australia produced another 12 billionaires in 2025, and the top 200's collective wealth grew to $707.25 billion, up by 5.9% in the past year. Contrast that with a real wage cut of at least 5.9% for average earners over the past five years. Unless next year's wage review provides for a more reasonable increase, Australian workers are likely to keep seeing their buying power decline for yet another year.
