Australia lifts minimum wage to match increases in inflation

Australia's lowest-paid workers will receive a 4.75% pay rise starting July 1, a decision announced by the nation's independent wage-setting body. This increase, amounting to A$1,004.90 per week, affects approximately three million employees. The raise aligns with the central bank's projected inflation rate but falls short of the 5-6% increases demanded by trade unions.

The Fair Work Commission acknowledged that the Reserve Bank of Australia's tighter monetary policy is expected to slow the economy in the coming year. It noted that inflation has surged, partly due to the war in Iran disrupting oil supplies. "Taking into account all of these matters, 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," the commission stated.

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Taking into account all of these matters, 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.

However, the commission emphasized its commitment to protecting vulnerable workers. "However, we consider that we should at least ensure... employees generally are not worse off in real terms than they were as at July 1, 2025, and that we should also take additional measures to protect the position of the very lowest-paid worker," it added.

Consumer price inflation stood at 4.1% in the first quarter and is forecast to peak at 4.8% in the June quarter, significantly exceeding the central bank's 2-3% target band. The Reserve Bank of Australia has already raised interest rates three times this year to 4.35%, reversing earlier easing measures due to escalating energy prices. Recent economic data indicates a cooling consumer demand, with household spending falling in April, home prices flattening, and unemployment showing a slight increase.

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However, we consider that we should at least ensure... employees generally are not worse off in real terms than they were as at July 1, 2025, and that we should also take additional measures to protect the position of the very lowest-paid worker.