Minimum wage to rise 3.5%

The National Minimum Wage and all modern award minimum wage rates will increase by 3.5% on July 1.

The minimum wage is currently $24.10 an hour and, following the Fair Work Commission's decision today, will rise to $24.95 an hour. This equates to a before-tax wage of $948 per week, up about $32, or an annual salary of $51,512.

Accounting for inflation, which came in at 2.4% at the most recent read, it is a real wage increase of 1.1% - one of the largest awarded by the Fair Work Commission in its history.

The Fair Work Commission said the decision was driven by the fact that employees who are reliant on modern award minimum wages have suffered a reduction in the real value of their wage rates since 2021.

Some 2.9 million workers have their wages set by modern awards. Most employees who will benefit from the rise work in the accommodation and food services, community, care, retail, arts, administration, recreation and healthcare sectors.

"The continuation of this inflationary episode has meant that, over the last three Annual Wage Review decisions, the Fair Work Commission has repeatedly deferred taking any action to reverse this decline in real wages out of a concern that this might result in the persistence of higher inflation," the Fair Work Commission said.

"The result has been that living standards for employees dependent on modern award wages have been squeezed and the low paid have experienced greater difficulty in meeting their everyday needs."

It said the fact that the Reserve Bank of Australia is confident that underlying inflation has returned sustainably to the target range provided an opportunity to "go at least some of the way towards correcting what has happened over the last four years..."

"We are satisfied that the level of wage increase we have determined is sustainable. The labour market remains strong overall, with continuing employment growth, low unemployment and historically high rates of participation in the workforce. Reductions in interest rates are likely to lead to higher consumer demand and a higher level of economic growth than we have experienced in recent times," the Fair Work Commission said.