The Fair Work Commission’s (FWC) has released its annual wage review report, specifying the highest increase in a while and prompting counter viewpoints from industry and stakeholders.
Beginning 1 July the minimum wage will increase by 5.97 per cent, from $24.95 to $26.44 per hour, and workers on the minimum award will get an increase of 4.75 per cent, from $948 to $1,004.90 for a full-time 38-hour week.
Around about 21 per cent of Australian employees are paid a minimum award rate, equating to roughly 2.8 million people. These workers are disproportionately female, more than half are casuals, over two-thirds are part-time and a large proportion are low-paid.
These characteristics mean that the 21 per cent of workers only represent about 11.2 per cent of the national cost of wages, according to the FWC.
Every year the Commission garners submissions from government, business groups and unions.
The Federal government suggested an above-inflation increase, and the Australian Council of Trade Unions (ACTU) requested a rise of five per cent – later upping this to six per cent in light of the Federal budget forecasting increased inflation.
Conversely, the Australian Hotels Association (AHA) and the Australian Chamber of Commerce and Industry (ACCI) submitted for an increase of 3.5 per cent.
Annual inflation is currently (for April) being reported at 4.2 per cent, which is a slight drop from the 4.6 per cent in March.
However, the FWC says in real terms, for the majority of award-reliant employees the real buying power of their wages remains lower than mid-2021, prior to the spike in inflation following the pandemic.
The Commission was eager to prevent real wages continuing to go backwards and offers that 2026 proved especially “challenging” due to the as-yet unknown disruption and accelerated inflation stemming from America’s war in the Middle East.
The ACTU welcomed the FWC decision, pleased that the rise largely keeps pace with the cost of living.
Conversely, the AHA raises issues, and the ACCI suggests the increase will likely add to cost of business pressures for businesses at a time when many have limited ability to weather them.
“The AHA is concerned about the capacity of hoteliers to absorb the additional costs without reducing work hours for hard-working staff,” says AHA National CEO Ferguson.
While the FWC opted it would not be responsible in the current economy to award increases sufficient to close the real wage deficit back to 2021, it did decide to lift rates enough to ensure employees were generally not worse off than July 2025.
“It’s important to remember that businesses and workers alike are facing the battle of high interest rates, higher inflation and higher fuel and energy costs, to name just a few,” adds Ferguson.
“That’s exactly why we argued for a modest but reasonable minimum wage increase of 3.5 per cent.
“That said, I acknowledge the FWC has a difficult task here in finding the correct balance between the needs of struggling businesses and workers in uncertain economic times.”
In a positive to the broader economy economists say the latest hike is not likely to have a material impact on inflation, although AMP’s My Bui wrote they see a risk the RBA’s anticipated August rate hike may come sooner, in June, and they are now forecasting another rise in November.
