Millions of low-paid Australian workers are set to receive a wage increase from 1 July, after the Fair Work Commission (FWC) approved a 3.5 per cent pay rise.
The decision, handed down today following months of submissions and lobbying from unions and business groups, will affect 2.9 million workers nationwide. The increase will lift the national minimum wage from $24.10 to $24.95 per hour, equivalent to $948 per week for a full-time, 38-hour work week.
The wage bump lands between the Australian Council of Trade Unions’ (ACTU) push for a 4.5 per cent increase and employer groups’ call for a rise of no more than 2.5 per cent. Last year, the FWC opted for a slightly higher 3.75 per cent increase.
The 3.5 per cent adjustment comes amid ongoing cost-of-living pressures. While annual inflation currently sits at 2.4 per cent, the Reserve Bank of Australia expects it to rise to 3.1 per cent by mid-2026 as temporary government subsidies such as energy bill relief wind down.
ACTU Secretary Sally McManus welcomed the pay rise but said many workers are still just getting by. “It’s about whether you can keep up with your bills or not — whether your life gets slightly better or goes backwards,” she told AAP.
“When you’re on those wages, you’re not saving money. Everything you earn, you spend.”
The ACTU had argued for a higher-than-inflation rise to compensate for years of stagnant real wage growth, especially in award-reliant sectors such as hospitality, retail, and care work, where a disproportionate number of workers are female, part-time, or casual.
Employer groups, including the Australian Chamber of Commerce and Industry and the Council of Small Business Organisations, had warned that a larger increase would hit small businesses hard and could lead to job losses or closures. They argued that many companies are still grappling with high operating costs and rising superannuation contributions.
However, McManus countered that consumer spending, not wages, is the real issue.
“Businesses are struggling because people don’t have enough money to spend,”
she said.
The federal government did not recommend a specific figure but had called for a “sustainable” increase that ensured real wage growth without undermining economic stability.
The new rate will directly affect those on minimum award rates — about one in five employees — although the number of workers on the absolute minimum wage is estimated to be under 100,000.
The FWC’s decision is seen as a balancing act, aiming to deliver a real wage increase to Australia’s lowest paid without adding fuel to inflation or placing excessive strain on employers.
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