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The peak body for unions will demand a 5 per cent wage increase for the nation’s lowest-paid workers and has warned it may lift the claim higher, as global conflict and energy price volatility continue to drive up inflation.
On Tuesday, the Australian Council of Trade Unions will tell the Fair Work Commission’s annual wage review that the increase is needed to help about 3 million workers get ahead of cost-of-living pressures.
If successful, the claim would lift the minimum wage from $24.95 to $26.19 an hour, pushing up the annual full-time rate by about $2465 to $51,761.
But ACTU secretary Sally McManus said unions were “reserving our right” to increase the claim ahead of the Fair Work Commission hearings, warning that workers could not be allowed to fall further behind.
“We do not know how long this war [in Iran] is going to go on, we do not know how much that’s going to affect inflation. We don’t know how long that tail will be,” she said.
The impact of the wage review flows through to the pay packets of Australian workers whose wages are set by industry awards. Last financial year the commission gave workers an above-inflation boost of 3.5 per cent when inflation was running at 2.4 per cent.
The latest push from unions follows economic data released by the Australian Bureau of Statistics in February showing wage rises are not keeping up with inflation. Households are also under renewed financial strain after the Reserve Bank increased interest rates for the second time this year and fuel has soared above $2.40 a litre.
The Wage Price Index for the 12 months to December 2025 showed wages grew 3.4 per cent in the year to December, lower than inflation for the same period of 3.8 per cent. The Reserve Bank’s latest forecasts say inflation will hit 4.2 per cent by June.
Following the release of that data, Treasurer Jim Chalmers said inflation was “higher than we’d like”, which would continue to have implications for real wages.
“We have an inflation challenge in our economy, which is impacting real wages, and that inflation challenge and the productivity challenge and global economic uncertainty are the most important things that the government is focused on in our economic plan,” he said.
McManus said unions could revise up their claim following the release of the March quarter national accounts data, to counter cost-of-living pressures, particularly high housing costs.
“Should it be in a position where workers are going to go backwards and not start to reclaim any of that lost ground, we’ll upgrade that pay claim,” McManus said.
“When we are talking about this group of workers … they don’t have capacity anywhere to have control over what they do to adjust their budgets. Their variable is wages; that’s the one thing that makes a difference for them.”
McManus said award workers were still lagging after the post-COVID inflation surge. She said there was no way Australian unions would accept that workers should be going backwards.
Ahead of the release of its official wage claim, the ACTU had signalled it would push for above-inflation pay rises, prompting criticism from employer groups, which argue large increases risk adding to inflation and placing further pressure on business costs.
The Australian Chamber of Commerce and Industry, which is finalising its submission to the annual wage review, said any above-inflation wage push by the unions would be self-defeating.
Chief executive Andrew McKellar warned that such a wage rise risked entrenching inflation and prolonging the cost-of-living squeeze.
“The approach that the trade union movement takes will only tip fuel onto this fire we are seeing in terms of inflation and inflationary expectations,” he said.
But McManus said the proposed minimum wage rise would have no impact on inflation.
“There is no evidence whatsoever that increases in the minimum wage or award wages … have had any impact whatsoever on inflation, because they don’t,” she said.
She said a 5 per cent wage boost for lower-paid workers would add about 0.6 per cent to the national wage bill.
“The effect on inflation just isn’t there.”
Ahead of the May budget, McManus also urged the Albanese government to take action on housing affordability by targeting tax breaks for investors.
“It’s just not fair that working people are carrying the majority of the tax bill … it’s just unacceptable,” she said. “We’re not waiting any longer … because delay just draws out the pain for people.”
The closing date for initial submissions for the wage review is March 27. The annual decision is due in June.
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