Unions urge five per cent pay rise as inflation bites
Nearly three million low-wage workers will receive thousands more annual wages under union pressure for a five percent wage increase.
The ACTU will ask industry arbitrator the Fair Work Commission to increase the minimum wage from $24.95 to $26.19 per hour in its submission to the annual review of minimum and award wages.
A five per cent increase would increase the annual minimum wage by $2465 to $51,761, while millions of workers earning reward wages would receive even higher increases.
ACTU secretary Sally McManus said wage growth would ensure workers stay ahead of cost-of-living pressures as war in the Middle East drives up inflation.
“We will not accept Australia’s lowest-paid workers going backwards because of the Reserve Bank and Donald Trump,” he said.
“Last time inflation was on the rise, workers felt it the most; we can’t let that happen again.”
Official data show inflation increased by 3.8 percent in the 12 months to January.
The Fair Work Commission gave a 3.5 percent increase to the minimum wage and a reward to wage earners as of July 1, 2025.
At the time, headline inflation was below three percent and the Central Bank was forecast to remain within the two to three percent target range.
However, the resurgence in inflation and the Iran war reversed the scenario.
Private sector economists and the Treasury have warned that price increases could be as high as five percent in 2026 as rising fuel costs impact the economy.
Employers say a wage increase above inflation will make the RBA’s job even more difficult.
“The risk is that this will add fuel to the inflation fires that we are already seeing, which will put further pressure on interest rates in the coming months,” said Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry.
“We think this is completely unfair.”
Mr McKellar said the ACCI would seek a 3.5 per cent increase, which would allow inflation in the middle of the RBA’s target range plus a one percentage point allowance for productivity growth.
Westpac senior economist Pat Bustamante said Australia was a service economy so wages made up a large part of input costs for businesses.
“If input costs increase, it will eventually be passed on to the consumer,” he said.
Ms McManus said the entire ACTU wage claim would cost less than $8 billion; That’s lower than BHP’s profit in the last six months.
“What triggers inflation is the cost of price inflation by housing and oil companies,” he said.
While the first applications for the annual wage review closed on Friday, the Fair Work Commission is expected to announce its decision in June.
