Labor Pushes for Real Wage Hike for 3 Million Workers

Labor’s wage push comes as public sector pay outpaces private wages for the first time in four years.

Australian Prime Minister Anthony Albanese and the Treasurer, Jim Chalmers visit Sunnybank Market Square in the electorate of Moreton in Brisbane, Australia on April 29, 2025. Asanka Ratnayake/Getty Images

The Albanese Labor government has called on the Fair Work Commission (FWC) to deliver another wage increase for nearly 3 million Australian workers to account for inflation.

In a formal submission ahead of the FWC’s annual decision next month, the government said it “believes workers should get ahead with a real wage increase.”

The minimum wage currently stands at $24.10 per hour, or $915.90 a week, covering 2.9 million workers. Last year, the Commission approved a 3.75 percent rise.

With inflation sitting at 2.4 percent annually—and 2.9 percent on an underlying basis—the government has not proposed a specific figure.

The minimum wage has already increased by $143 a week since Labor came to office, and the median wage has increased by $206 per week.

Labor’s wage push comes at a time when taxpayer-backed public sector salaries are climbing faster than those in the private sector—for the first time in four years.

However, Treasurer Jim Chalmers and Employment Minister Amanda Rishworth defended the regulatory push as both fair and economically sound.

“An increase in minimum and award wages is consistent with inflation sustainably remaining within the RBA’s target band and will provide further relief to lower income workers who are still doing it tough,” the ministers said in a joint statement.

Public Sector Pay Driving National Wage Growth

Latest data from the Australian Bureau of Statistics released on May 14, shows public sector wages rose by 3.6 percent over the past year.

Meanwhile, private sector growth slowed to 3.3 percent, down from the 2024 peak of 4.2 percent.

Overall wage growth for the March quarter hit 3.4 percent, but that rise was entirely driven by public sector gains, which jumped from 2.9 to 3.6 percent in just one quarter.

As per ABS analysts, much of that activity can be attributed to new enterprise agreements and taxpayer-backed increases for nurses, aged care workers, and educators.

Employers Sound Alarm on Fiscal Pressure

Business leaders have voiced concerns over the widening public-private wage gap, warning of growing strain on the economy and public budgets.

“Public sector wage agreements have become increasingly out of touch with the realities of the Australian economy,” said Innes Willox, chief executive of the Australian Industry Group.

Willox pointed out that 2024 marked one of Australia’s worst economic years since the early 1990s recession.

“Pressure from excessive state government wage deals puts further pressure on Australian private sector employers, who are already struggling with weak market conditions and declining profitability.”

A 2024 report by KPMG also warned that public sector wage hikes are increasingly being underwritten by taxpayers, with little alignment between wage policies and overall economic performance.

The report noted that increases in aged care, disability, and childcare now totalled around $30 billion.

“It continues the ramping up of government spending and adds to our concern that there is an ongoing disconnect between fiscal and monetary policy, which makes the RBA’s job of curbing inflation even more challenging.”