Australian Workers Win 3.5% Minimum Wage Increase Starting July
The Fair Work Commission announced Tuesday a 3.5% increase to Australia's minimum wage rates, delivering the first real wage growth to the country's lowest-paid workers after four years of declining purchasing power.
The increase affects the National Minimum Wage and all modern award minimum wage rates, taking effect July 1, 2025. The decision directly impacts approximately 2.7 million Australian employees — about 20.7% of the workforce — who rely on the 121 modern industry and occupational awards for their pay rates.
"Since July 2021, employees who are reliant on modern award minimum wages or the National Minimum Wage have suffered a reduction in the real value of their wage rates," the Commission stated in its decision announcement.
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The benchmark C10 award rate declined 4.5 percentage points relative to inflation as measured by the Consumer Price Index, the Commission found.
The wage increase comes after the Reserve Bank of Australia determined inflation has "sustainably returned to its target range of 2–3 per cent," signaling the end of the inflationary period that began in 2021 and peaked in late 2022.
"We are concerned that if this opportunity is not taken in this Annual Wage Review, the loss in the real value of wages which has occurred will become permanently embedded in the modern award system," the Commission warned.
The affected workforce includes disproportionately female employees, with more than two-thirds working part-time hours and more than half employed as casual workers. Four industry sectors — Accommodation and food services, Health care and social assistance, Retail trade, and Administrative and support services — account for over two-thirds of all modern award-reliant employees.
The Commission cited strong labor market conditions as supporting the wage increase, noting "continuing employment growth, low unemployment and historically high rates of participation in the workforce."
However, Australia's poor productivity growth operated as "a restraining factor on the size of the increase," particularly in the non-market healthcare and social services sectors where employment has grown significantly.
The Commission also announced plans to accelerate its program reviewing professional classifications in modern awards to eliminate gender-based undervaluation, focusing on positions requiring university degrees.
"The result has been that living standards for employees dependent on modern award wages have been squeezed and the low paid have experienced greater difficulty in meeting their everyday needs," the Commission said of the recent period.
The decision follows submissions from employer organizations, unions and federal and state governments, though the Commission emphasized its role in making independent assessments rather than adjudicating between competing proposals.
"Australian Unions welcome the decision of the Fair Work Commission to lift the wages of around 3 million workers by 3.5% come the 1 July," ACTU Secretary Sally McManus said. "Their decision supports the ACTU's argument that Australia's lowest paid workers should catch up with what was lost during the inflation spike."
The wage increase will provide full-time workers with an annual pay boost of $1,666, directly affecting employees across accommodation and food services, community care, retail, arts, administration, recreation and healthcare sectors.
Most workers impacted by the decision are employed part-time in industries that have struggled during recent economic pressures. The commission accepted union arguments that low-wage workers needed to recover ground lost during the inflation spike.
"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," McManus said.
Two affected workers highlighted the personal impact at Tuesday's announcement. Mars King, a retail salesperson earning about $650 weekly, said the increase would help him save for a house deposit and stop living paycheck to paycheck.
William Seamons, who works in corporate security and commutes 250 kilometers daily, said the roughly $1-per-hour increase would help cover essential expenses including rates, insurance and medical costs.
McManus credited the Albanese Labor government's support as crucial to achieving the outcome, noting Treasury backed the union position that real wage increases were economically sustainable.
"Achieving this 3.5% 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," McManus said.
The decision exceeded business groups' recommendations of 2.5% to 2.6%. When questioned about small business concerns over rising costs, McManus argued that workers with increased disposable income would benefit local businesses through higher consumer spending.
"With unions delivering strong real wage growth in collective agreements and now with real award wages growing, working people have turned the corner and are seeing decent real wage growth for the first time in more than a decade," McManus said.
The Fair Work Commission’s Expert Panel today announced the National Minimum Wage and award wages will increase by 3.5 per cent from 1 July 2025, following the 2024–25 Annual Wage Review.
The National Minimum Wage will increase by:
$0.85 to $24.95 per hour
$32.10 to $948.00 per 38‑hour week
$1,669.20 to $49,296.00 per year.
This follows the Albanese Labor Government’s submission to the Expert Panel recommending it award an economically sustainable real wage increase to Australia’s award workers.
In three years since Labor came to government, the National Minimum Wage has increased by $4.62 per hour, 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.
Last year, the Fair Work Commission awarded an above inflation 3.75 per cent increase to the National Minimum Wage and award wages.
Minister for Employment and Workplace Relations Amanda Rishworth said the decision was a win for workers.
“I welcome the Fair Work Commission’s decision to increase the National Minimum Wage and award wages,” Minister Rishworth said.
“Our Government believes that workers should get ahead with an economically sustainable real wage increase.
“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.”
Treasurer Jim Chalmers said the decision is good for workers, good for the economy and will help with the cost of living.
“This decision is very welcome news for millions of workers across the country and is recognition of the progress Australians have made together in the economy,” Treasurer Chalmers said.
“Under Labor, real wages are up, inflation is down, unemployment is low, incomes are growing and we’ve had two interest rate cuts in three months.
“We know people are still under pressure and that’s why this decision and our ongoing cost‑of‑living relief are so important.
“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.”
Our economic strategy has been about getting wages moving again and getting on top of inflation, while maintaining the gains in the labour market and building a more productive economy over time.
Under Labor, more Australians are working, earning more and keeping more of what they earn.
Annual real wages have grown for 18 months in a row under the Albanese Government, after going badly backwards under the previous Liberal government and falling for the five quarters in the lead up to the 2022 election.
On the official quarterly numbers, the March quarter was the first time since records began that unemployment has been in the low 4s and headline and underlying inflation have both been in the target band.
Increases to minimum and award wages add to our suite of cost‑of‑living measures and policies to support workers, including our Secure Jobs, Better Pay reforms and our tax cuts for every taxpayer.
All this progress we have made together means we are well placed and well prepared at a time of global economic uncertainty and volatility.
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