Wage rise not enough for lowest-paid workers: union

June 4, 2025 10:45 | News

An increase to the minimum wage won’t be enough for the nation’s lowest-paid workers to live on, the Australian Council of Trade Unions says.

The Fair Work Commission announced its decision to lift the minimum wage by 3.5 per cent on Tuesday, with almost three million low-paid workers set to earn an extra $32 a week.

The rise will come into effect from July, with the minimum wage rising to $24.95 an hour, benefiting more than one-fifth of the workforce.

A worker in a Melbourne nail salon
The Fair Work Commission decision affects almost three million workers. (Joel Carrett/AAP PHOTOS)

Sally McManus, the secretary of the ACTU, said workers had gone backwards in real terms and needed to catch up to where they were before the COVID-19 pandemic.

“We used to have this idea in Australia that a full-time wage should be a living wage, like one you can live on, and we don’t anymore, because it’s slipped back,” she told ABC radio on Wednesday. 

“So we will be sort of setting our sights in the future about making sure that the very bottom number of the minimum wage, which is less than 50 grand, is actually a livable wage.”

ACTU Secretary Sally McManus after the Fair Work Commission decision
Sally McManus says the ACTU wants to achieve ‘a livable wage’ for the country’s lowest-paid workers. (James Ross/AAP PHOTOS)

Federal Employment Minister Amanda Rishworth said she was disappointed the coalition had labelled the decision another expense for small business.

“I’m not sure that the argument that we pay people less and we don’t see our lowest paid workers get a wage increase, is actually the answer to what is broadly the discussion in this country, which is how do we improve productivity,” she told ABC’s RN.

While the boost in pay packets is set to lead to small growth in the wage price index, economists say the change won’t be substantial enough to alter the likelihood of the Reserve Bank cutting interest rates later this year.

For sale signs on property in Maroubra, Sydney
The lift in minimum wages is considered unlikely to be a significant factor in RBA rate decisions. (Rhett Watson/AAP PHOTOS)

National Australia Bank senior markets economist Taylor Nugent said there would be little impact on the wage price index, which is examined by the central bank when deciding whether or not to alter the cash interest rate.

“We don’t see any implications of (the Fair Work Commission’s) decision for our own or official wages growth forecasts,” he said.

CreditorWatch chief economist Ivan Colhoun said the commission’s decision is set to put a lower limit on inflation.

“(The) decision of a real wage increase will tend to put something of a floor under inflation without an improvement in productivity performance,” he said.

The business sector has hit out at the wage decision, saying the increased labour costs would result in many employers having to lay off staff.

The Council of Small Business Organisations had argued for a wage rise of between two and 2.5 per cent.

Mr Colhoun said the commission’s decision sought to strike a balance between a wage rise for workers alongside uncertainty in the global economy.

AAP News

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