Australia’s independent wage-setting authority, the Fair Work Commission, has approved a 4.75% increase in the national minimum wage, benefiting about 2.8 million low-income workers from July 1.
The adjustment will raise the minimum wage to A$1,004.90 per week, or A$26.44 per hour, exceeding the increases granted in the previous two years but falling short of the 5% to 6% rise demanded by labour unions.
In its decision, the commission cited ongoing economic uncertainty, including the impact of tighter monetary policy and inflationary pressures linked to disruptions in global oil supplies resulting from the US-Israeli conflict with Iran. While acknowledging that a real wage increase was not feasible under current conditions, the commission said the adjustment was necessary to ensure workers do not lose purchasing power compared to July 2025.
Australia’s inflation rate stood at 4.1% in the first quarter and is expected to climb to 4.8% in the June quarter, remaining above the Reserve Bank of Australia’s target range of 2% to 3%. Economists have warned that the wage increase could add to business costs and contribute to persistent inflation, potentially prompting further interest rate hikes.
Analysts at Citi believe the decision strengthens the case for another rate increase in August, while Westpac noted that the larger-than-expected wage rise could accelerate wage growth and keep inflation expectations elevated. The Reserve Bank has already raised interest rates three times this year to 4.35%, as rising energy costs and global economic pressures continue to challenge the Australian economy.
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