Australia’s Fair Work Commission (FWC) has announced a 3.5% increase to the national minimum wage, effective from July 1. This decision marks an above-inflation rise designed to help millions of low-paid workers regain lost purchasing power amid easing inflation.
The increase raises the minimum hourly wage to $24.95 and the weekly full-time wage to $948, representing a weekly boost of approximately $32. The move follows sustained pressure from unions and government advocacy for real wage growth after several years of stagnant or declining income levels for award-reliant employees.
Addressing Real Wage Decline Among Australia’s Lowest Earners
The Fair Work Commission president, Justice Adam Hatcher, said the increase was necessary to counteract “entrenched” reductions in real wages experienced since mid-2021.
According to the FWC, inflation had eroded the value of minimum and award wages by about 4.5 percentage points during this period, squeezing the living standards of low-income workers.
With headline inflation now steady at 2.4%, well within the Reserve Bank of Australia’s target band, the commission deemed it appropriate to restore purchasing power. Justice Hatcher stressed that failing to act would risk permanently embedding wage losses and worsening living conditions for nearly three million workers paid under awards.
The affected workforce is predominantly employed in labour-intensive and female-dominated sectors such as hospitality, healthcare, and social assistance. Although fewer than 100,000 Australians are paid exactly the minimum wage, around one in five employees receive wages determined by modern awards, which this rise will influence directly.
The Australian Council of Trade Unions (ACTU) welcomed the decision as a significant step forward. ACTU Secretary Sally McManus noted the increase would help award-reliant workers “start to get ahead again” after years of cost-of-living pressures.
Balancing Economic Sustainability With Business Concerns
The wage rise falls between the positions of trade unions, which had pushed for up to 4.5%, and business groups advocating a more modest increase of 2–2.5%. The Australian Chamber of Commerce and Industry described the 3.5% rise as “generous,” highlighting concerns over declining productivity and rising operational costs for employers.
Small business representatives voiced worries about the cumulative financial impact, which includes not only wage costs but also associated expenses such as workers’ compensation, payroll tax, and rising superannuation contributions.
Luke Achterstraat, CEO of the Council of Small Business Organisations Australia, emphasised that many small enterprises are already operating on tight margins amid energy and rent cost pressures.
Economists suggest that while the increase is above inflation, it is unlikely to trigger further tightening by the Reserve Bank of Australia, which has recently cut interest rates in response to easing inflation.
The resilient labour market and stable unemployment rate of 4.1% provide a context in which a measured real wage rise can occur without risking a wage-price spiral.
The FWC acknowledged ongoing productivity challenges in Australia, noting that these concerns have influenced the scale of wage increases in recent years. The commission’s decision reflects an attempt to balance the need for wage restoration among the lowest-paid with broader economic sustainability.
