Nearly three million Australian workers will receive a pay increase from July 1 after the Fair Work Commission handed down its annual wage review, lifting minimum and award wages in a decision closely watched by employees, businesses and policymakers.
The industrial umpire announced a 4.75% increase for workers covered by modern awards, while around 100,000 employees on the national minimum wage will receive a larger 6% increase. The decision raises the minimum wage to $26.44 per hour and increases the weekly rate from $948 to $1,004.90.
The ruling affects roughly one in every five Australian workers. Although these employees represent a significant portion of the workforce, the Fair Work Commission estimates they account for about 11.2% of the national wages bill, reflecting their concentration in lower-paid occupations.
Balancing wages and inflation concerns
The decision comes as Australia continues to grapple with elevated inflation and global economic uncertainty. According to the Australian Bureau of Statistics, headline inflation stood at 4.2% in the year to April, while the Reserve Bank of Australia has forecast inflation could reach 4.8% by the end of June.
Adding to those concerns are ongoing tensions in the Middle East and uncertainty surrounding shipping through the Strait of Hormuz, a key global energy route that economists are watching closely for its potential impact on fuel prices and broader inflation.
Fair Work Commission President Adam Hatcher said the panel considered but ultimately rejected a wage increase above 5%, arguing that such a move would not be practical or responsible under current economic conditions. However, the commission concluded that award-reliant employees should not be worse off in real terms than they were a year ago.
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Unions, business groups and government react
The final decision landed between competing submissions from unions and employer groups. The Australian Council of Trade Unions (ACTU) had sought a 6% increase, arguing that many workers were still recovering from the loss of purchasing power caused by the post-pandemic inflation surge.
Employer body Australian Industry Group called for a more modest 3.9% increase, warning that larger wage rises could place additional pressure on businesses and contribute to inflation.
Treasurer Jim Chalmers welcomed a meaningful increase for workers, saying higher wages and lower taxes remain important tools for helping households manage rising living costs. Opposition frontbencher James Paterson said workers deserved higher pay but argued the underlying challenge remained inflation, warning that persistently high price growth could eventually weigh on jobs and economic growth.
The Fair Work Commission’s full determination is available on the Fair Work Commission website.
Beyond this year’s increase, the commission confirmed it will continue reviewing pay rates in female-dominated industries to address gender-based undervaluation. Significant wage adjustments have already been made in childcare, pharmacy, healthcare and other care-economy occupations, with further reviews expected.
For more Australian policy and workforce developments, read our coverage of Australia’s minimum pay protections for food delivery workers.