Around 2.8 million of Australia’s lowest-paid workers will get a 4.75% pay rise from July 1 this year, after the latest Fair Work Commission annual decision on award wages.
Around 100,000 of the very lowest paid workers, on entry level and minimum pay, were singled out for an almost 6% increase, as rising inflation had left some of them unable to pay their bills.
But even after those pay rises, the commission’s expert panel acknowledged low-paid employees still won’t earn as much in real terms as they did five years ago, when inflation spiked towards the end of the COVID pandemic.
The latest data included in the panel’s decision shows inflation has risen faster than wages since June 2021 – resulting in a real wage cut of 5.9% for average earners.
Note: All data is in original terms. AWOTE is published half-yearly for May and November.
Source: ABS, Consumer Price Index, Australia, April 2026; Wage Price Index, Australia, March 2026; Average Weekly Earnings, Australia, November 2025, CC BY-NC
Who benefits from this decision
Announcing the wage rises, Justice Adam Hatcher said this was a “particularly challenging” decision, especially due to the “wild card of the Middle East conflict” and its ongoing price shocks on fuel and other goods.
Amid so much uncertainty, the expert panel said:
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 reliant on modern award wage rates that would be sufficient to close the real wage gap entirely.
The wage increase starting on July 1 will have the biggest impact on women, part-time and casual workers.
More than 60% of the lowest paid workers are women, with an average age of 34. More than 70% work part-time. They mostly work in four industries: accommodation and food services, health care and social assistance, retail, and administrative and support services.
A 6% rise for the very lowest paid
Around 100,000 of the lowest paid workers will get a 5.97% pay rise.
From July 1, the national minimum wage will be increased from $24.95 an hour to $26.44, or up from $948 a week to $1004.90 per week.
For those starting in entry-level jobs, the lowest award rate for the first six months will rise to $25.74 per hour, or $978.10 per week.
The panel said those increases for the lowest paid 100,000 workers will be followed up with two more rises in coming years.
Future wage rises coming for others
The expert panel said it plans to do more to close the gender pay gap in female-dominated professions.
Over the next few years, this will mean phased-in wage increases for children’s services employees, dental assistants, pathologists, disability home care workers, pharmacists and some other health professionals.
Nurses and flight attendants’ pay will also be examined over the next year.
Why wages are struggling to keep up
The expert panel said they didn’t want people to go backwards as inflation keeps rising in the months ahead, so chose a 4.75% rise to at least keep people’s buying power at the level it was a year ago.
However, by my calculations – using their own figures – that still hasn’t happened.
Each year, the panel sets rates for around 21% of Australian workers, on more than 120 different “awards”, which set out minimum terms and conditions of employment.
As a key reference point, the panel looks at the “C10 classification”: the award rate of pay for an entry level tradesperson in manufacturing.
This chart, from today’s decision, shows how inflation has continued to climb faster than the wages of an entry-level tradie, as well as someone on the national minimum wage (NMW).
Source: ABS, Consumer Price Index, Australia, April 2026; Fair Work Commission, Modern Awards Pay Database, CC BY
That’s because as you can see – and as the panel itself acknowledged last year – inflation can rise all year, but award wages only increase once a year. This creates a significant fall in people’s real purchasing power between wage increases.
This time last year, the panel noted this had actually resulted in a 14.4% drop in real earnings power for someone on an average award from June 2021 to June 2025.
How does the wage rise compare to inflation?
Inflation was lower than expected last month, partly thanks to fuel discounts that started in April to offset higher oil prices. Those discounts are due to end on June 30.
The monthly consumer price index (CPI) rose 4.2% in the 12 months to April 2026, down from 4.6% in March.
Last month, Treasury forecast inflation would peak around 5% in the middle of this year, driven higher by the Middle East war. That’s more than the 4.75% award wage rise.
However, if the war ends and global oil prices ease, inflation is forecast to halve by mid next year, down to 2.5% – back within the Reserve Bank’s target band of 2–3%. That would take the pressure off the bank to keep lifting interest rates, as it’s done three times already this year.
But Treasury also considered a worst-case scenario: that the war drags on and oil prices rise from around US$100 a barrel now to US$200. If that happened, inflation could peak at 7.25% at the end of this year.
What it means for rates and the wealth gap
On balance, this year’s wage decision was conservative, as the expert panel acknowledged themselves by saying they regretted not lifting wages more.
So this decision should not add pressure on the Reserve Bank to lift interest rates in a fortnight, when its board next meets on June 15-16.
Low and middle income earners have not caused Australia’s economic problems. In particular, they are not prime contributors to inflationary pressures.
Just days ago, the Australian Financial Review’s latest Rich List reported Australia produced another 12 billionaires in 2025. Collectively, the top 200’s wealth grew to $707.25 billion – up by 5.9% in the past year.
Contrast that with a real wage cut of at least 5.9% for average earners over the past five years.
Unless next year’s wage review breaks with its timidity and provides for a more reasonable increase, Australian workers are likely to keep seeing their buying power decline for yet another year.
John Buchanan, Professor in Working Life, Discipline of Business Information Systems, University of Sydney Business School, University of Sydney
This article is republished from The Conversation under a Creative Commons license. Read the original article.
