The national minimum wage is set to lift by 3.5 per cent on July 1 this year following a Fair Work Commission review, with some industry peak bodies calling it higher than necessary.
Minimum wages are set to lift by 85 cents to $24.95 per hour, with weekly wages to hit $948, and minimum yearly salary to hit $49,296 per year.
Australian Industry Group CEO Innes Willox said the lift is higher than the national inflation, which was 2.4 per cent in the 12 months to the March 2025 quarter.
"The decision is a clear repudiation of the ACTU's irresponsible call for a 4.5 per cent increase,” Willox said. “However, it remains considerably higher than inflation.
“While Ai Group supported a moderate increase in real award wages reflecting cost of living concerns, 3.5 per cent combined with the additional 0.5 per cent superannuation costs employers will face from next month is well beyond what current economic conditions can safely sustain.”
ACTU secretary Sally McManus said unions have welcomed national wage increase, which she said supports the ACTU’s argument that Australia’s lowest paid workers should catch up with what was lost during the inflation spike.
“Achieving this 3.5 per cent increase was also only possible because the Albanese Labor Government delivered on their election promise and joined unions in arguing for a real wage increase,” MacManus said.
“This wage increase means those who are paid award wages will start to get ahead again, easing pressure on their weekly budgets and part of the stress that comes from having to cut back on the basics.”
Meanwhile, the Australian Retailers Association (ARA) and the National Retailers Association (NRA) did not share any fresh commentary on the minimum wage increase, but did point Ragtrader to its submission to the Fair Work review earlier this year.
In their submission, both organisations wrote that wage increases should not “unnecessarily exceed” the rate of headline inflation, “in order to balance wage growth with broader increases in the cost of doing business, and to not inadvertently add to existing inflationary pressures within the economy.”
It added that committed increases to the Superannuation Guarantee, up 0.5 per cent, should be taken into consideration for this review, and further noted that wage growth must be linked to productivity growth, ensuring that any increases in real wage growth are sustainable.
The ARA and the NRA outlined key factors challenging the retail market, including increased business costs such as rents and logistics, softened discretionary spending, and a tight labour market.
“In light of the abovementioned factors, our members will be negatively impacted by any significant increase to national minimum wages and award minimum wages,” both parties wrote. “While inflation is forecast to decline, supply chain issues persist, the cost of doing business remains high and consumer spending continues to be modest.
“Given these considerations, the ARA and NRA jointly submit that any increase to wages must be sustainable for business, while alleviating cost-of-living pressures for employees, and should not exceed the actual rate of headline inflation, while factoring in the impending increase to superannuation.”
In the three years since Labor came to government, the national minimum wage has increased by $4.62 per hour. This is according to a joint release by Treasurer Jim Chalmers and the minister for employment and workplace relations Amanda Rishworth, with both adding the increase is more than $175.00 per week and $9,120.00 per year, or a 22.7 per cent increase.
Based on the latest annual inflation figures, measured at 2.4 per cent through the year to the March quarter 2025, this is a real wage increase of 1.1 per cent for all national minimum wage and award workers, the release added.
Last year, the Fair Work Commission awarded an above inflation 3.75 per cent increase to the national minimum wage and award wages.
Rishworth said the recent decision is a win for workers.
“Our Government believes that workers should get ahead with an economically sustainable real wage increase,” Rishworth said.
“A real wage increase provides further relief to our lowest paid workers who continue to face cost-of-living pressures. The panel’s decision will benefit up to 2.9 million Australian workers who have their pay set by an award.”
Chalmers chimed in, saying it is also good for the economy and will help with the cost of living.
“We know people are still under pressure and that’s why this decision and our ongoing cost-of-living relief are so important,” Chalmers said.
“Boosting wages, cutting taxes for every taxpayer and creating more jobs are central parts of our efforts to help Australians with the cost of living.”
On the other side of the arena, Willox lashed back, saying that Australia's economy is muddling through the lowest period of growth since the recession of the early 1990s.
“Business margins are falling, private sector employment and investment is weak, while productivity is barely moving. Uncertainty arising from global tariffs and turmoil is also beginning to weigh on the outlook,” he said.
"Of particular concern is Australia's weak productivity since the pandemic. While the Commission has noted the difficulties in the non-market sector, productivity is also poor in the market sector. Multifactor productivity in the market sector grew at a risible 0.07% last financial year, only a tenth its normal level in the period before the pandemic.”
Willox said real wages growth is only sustainable when supported by proportionate productivity uplifts, noting that the 3.5 per cent increase will further suppress private sector investment and employment generation at a time when the economy can least afford it.
"As employers will need to find the resources to fund these above-inflation wage increases, investment is likely to suffer,” he said. “Yet recent data showed that private capital expenditure has begun to fall in 2025 on the back of a slow economy and mounting global uncertainty.
"We estimate that this decision will directly increase the national wages bill by around $5 billion over the coming financial year. Its effects will fall hardest on industries such as retail, manufacturing and accommodation & food, which are already struggling with very weak business conditions.”
"We assess that this increase will fully restore the real value of award wages to their level in mid-2021 prior to the outbreak of inflation. There should be no grounds for further inflation 'catch up' margins to be included in future AWR decisions.”