Annual wage review decision made to increase minimum wage for 2.6 million workers from July 1

More than 2.6 million Australians will have their pay packets boosted from July 1, with the size of the increase coming down to a tug-of-war between unions and business groups.

More than 2.6 million Australians will have their pay packets boosted, with the Fair Work Commission announcing a 3.5 per cent increase on Tuesday morning.

An expert panel spent the past year examining submissions from governments, unions and industry groups into how much to boost the national minimum wage, currently set at $24.10 per hour, or an annual full-time salary of $47,627.

The boost means the nation minimum will be set at $24.94 an hour, the equivalent of $49,294 a year.

Industry groups submitted that a boost of between 2 per cent and 2.5 per cent would prevent wage costs from crippling businesses, while unions have submitted an increase of between 4.5 per cent to 14.5 per cent is needed to give workers financial security amid high living costs.

Any rise below 2.5 per cent would fail to cover annual inflation, which has been steady at 2.4 per cent in the March and December quarters. The changes will come into effect from July 1.

Lobby groups have been quick to slam the decision as a blow to businesses facing high costs and low productivity.

The Australian Restaurant & Café Association said the wage hike would ultimately mean higher prices for customers.

“This wage increase is disconnected from the economic reality facing restaurants and cafés across Australia,” said CEO Wes Lambert.

“Inflation is moderating, productivity is in decline, and venues are barely breaking even - yet they’ve just been handed another cost increase they simply cannot absorb.

“Wage hikes without productivity growth are unsustainable. This will force venues to raise prices at a time when customers are already pulling back.”

Many hospitality and retail workers are on the minimum wage. Picture: Gaye Gerard

Meanwhile, Financial Counselling Australia welcomed the decision, with co-CEO Peter Gartlan saying counsellors regularly heard from workers struggling to cover basic living expenses.

Since the start of the year, there have been more than 71,000 enquiries to the National Debt Helpline (NDH). In 2024, the NDH fielded the most enquiries since 2019.

“The increase to the minimum wage is an important step in helping those who are struggling financially to make ends meet, particularly as cost-of-living pressures continue across Australia,” Mr Gartlan said.

In its submission, building industry group the Housing Industry Association said 2.5 per cent would be “an appropriate response”.

“In light of the current landscape, HIA strongly submits that the expert panel takes a conservative approach in this year’s minimum wage review” the submission said.

The Australian Government submitted the increase should be in line with inflation, but did not propose a specific percentage increase.

“The Australian Government recommends that the Commission award an economically sustainable real wage increase to Australia’s award workers,” it said.

The cost of living crunch has hit low-paid workers hard. Picture: David Crosling

In its submission, The Australian Council of Trade Unions said: “The extent of the decline in real wages episode has made making ends meet for the lowest paid and most vulnerable workers exceptionally challenging.”

As part of the Annual Wage Review, the commission can also change the national training wage, increase minimum wages in awards and boost the high income threshold and compensation cap.

The minimum wage increase can apply to employees covered by an enterprise agreement because the base pay rate in an agreement can’t be less than the base pay rate in the relevant award.

For financial counselling support, visit ndh.org.au or call the  NDH on 1800 007 007.

Originally published as Annual wage review decision made to increase minimum wage for 2.6 million workers from July 1