Unions demand 5 per cent pay rise for lowest-paid workers amid cost-of-living pressures
The unions’ peak body will demand a 5 per cent pay rise for the country’s lowest-paid workers and has warned it could further increase that demand as global conflict and energy price volatility continue to fuel inflation.
On Tuesday, the Australian Council of Trade Unions will report in the Fair Work Commission’s annual pay review that the increase is needed to help nearly 3 million workers cope with cost-of-living pressures.
If the application is successful, minimum wage will increase from $24.95 per hour to $26.19 and annual full-time pay will increase by approximately $2465 to $51,761.
But ACTU secretary Sally McManus warned workers could not be allowed to fall further behind, saying unions “reserve the right” to step up the challenge ahead of Fair Work Commission hearings.
“We don’t know how long this war will last [in Iran] It will continue, we don’t know how much this will affect inflation. “We don’t know how long this queue will last,” he said.
The impact of the pay review is also reflected in the pay packets of Australian workers whose wages are determined by industry awards. Last fiscal year, the commission gave workers a raise above 3.5 percent inflation, at a time when inflation was 2.4 percent.
The latest move from unions comes after economic data published by the Australian Bureau of Statistics in February showed wage increases had not kept pace with inflation. Households are also under new financial strain as the Federal Reserve raises interest rates for the second time this year and fuel prices rise above $2.40 per liter.
Wage Price Index It was observed that wages increased by 3.4 percent in the 12-month period until December 2025, which was below the 3.8 percent inflation in the same period. The Central Bank’s latest forecasts say inflation will reach 4.2 percent by June.
Following the release of this data, Chancellor of the Exchequer Jim Chalmers said inflation was “higher than we would like” and that this would continue to have effects on real wages.
“There is an inflation problem in our economy that affects real wages, and that inflation problem, the productivity problem and global economic uncertainty are the most important things that the government focuses on in our economic plan,” he said.
McManus said unions may revise their demands to counter cost-of-living pressures, particularly higher housing costs, following the release of March quarter national accounts data.
“If workers are in a situation where they’re going to go backwards and not start reclaiming the lost ground, we’re going to raise that wage demand,” McManus said.
“When we talk about this group of workers … they don’t have anywhere the capacity to control what they do to set their budget. Their variable is wages; that’s the only thing that makes a difference for them.”
McManus said reward workers are still left behind after the post-COVID inflation surge. He said there was no way Australian unions would accept workers going backwards.
The ACTU signaled it would push for above-inflation pay rises before announcing its official wage demand, prompting criticism from employer groups who argue large increases risk increasing inflation and putting more pressure on business costs.
Concluding its presentation on the annual wage review, the Australian Chamber of Commerce and Industry said any efforts by unions to push for above-inflation wages would be self-defeating.
Chief executive Andrew McKellar warned such a pay rise risks entrenching inflation and prolonging the cost of living contraction.
“The approach taken by the union movement will only add fuel to this fire that we see in terms of inflation and inflationary expectations,” he said.
But McManus said the proposed minimum wage increase would have no impact on inflation.
“There is no evidence that increases in the minimum wage or bonus wages have any impact on inflation, because they don’t,” he said.
He said a 5 percent wage increase for low-wage workers would add about 0.6 percent to the national wage bill.
“There is no impact on inflation yet.”
Ahead of the May budget, McManus also called on the Albanian government to take action on housing affordability by targeting tax breaks for investors.
“It’s not fair that working people are carrying the majority of the tax bill… this is completely unacceptable,” he said. “We don’t wait any longer… because the delay adds to people’s suffering.”
The closing date for the first applications for the wage review is March 27. The annual decision must be made in June.
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