On Could 19, 2026, Oxfam Australia’s media launch – Australian billionaires’ wealth grows by $50,000 per minute – knowledgeable us of the rising inequality in Australia, a rustic that promotes a ‘legend’ that egalitarianism is at its core. I’ll talk about their analysis intimately at one other time however the outcomes are beautiful. In a inhabitants of 28 million, the “20 richest Australians maintain extra wealth than the underside three million households”. Whereas a lot of the inhabitants are scuffling with “rising rents, grocery costs and vitality payments”, the top-end-of-town have had a “bumper yr” rising their wealth by round $A50,000 per minute. That ought to body our response to Tuesday’s (June 2, 2026) resolution – Annual Wage Overview 2026 – by the Honest Work Fee, Australia’s minimal wage setting authority, which elevated the Nationwide Minimal Wage (NMW) by 6 per cent. An extra cohort – these on minimal awards got a 4.75 per cent enhance of their wage. Towards the present CPI development, that enhance gives for some modest actual wage enhance for the bottom paid employees in Australia. In fact, the employer teams are up-in-arms as normal claiming that the rise (and flow-ons – see under) will devastate employment development and all the standard bunk as they put up file income. Fortuitously, the FWC largely ignored the bleating of the bosses. However in contrast to what’s occurring on the high of the earnings and wealth distribution, this modification to the NMW is trivial to say the least.
On this weblog put up – Australia’s minimal wage rises – however not ample to finish working poverty (June 6, 2017) – I outlined:
1. Progressive minimal wage setting rules.
2. The best way staggered wage selections (yearly) result in falling actual wages in between the wage adjustment factors.
I received’t repeat that evaluation right here. However it’s important background to understanding why the choices taken by Honest Work Australia have been insufficient for a very long time.
Who’s affected?
The Honest Work Fee units the NMW, which:
… applies solely to any individuals within the nationwide industrial relations system who aren’t coated by a contemporary award or an enterprise settlement. Such individuals represent, at greatest, solely a small fraction of the workforce.
There are about 100,000 employees on this class.
The FWC additionally units “minimal wage charges prescribed by trendy awards” throughout trade sectors and these selections influence on a a lot bigger proportion of the accessible workforce – these deemed to be ‘trendy award reliant’ staff – which signifies that they’re being paid below Australia’s award wage system, which is the bottom allowable wage for the related sector.
These awards are adjusted upwards when the NMW is altered.
The FWC famous that on this case:
Roughly 21.1 per cent of staff in Australia, amounting to nearly 2.8 million individuals, are paid at an relevant minimal wage price below a contemporary award and are thus straight affected by Overview selections.
There are 121 trendy awards within the Australian industrial construction.
The follow is that when the NMW is modified, that call then flows straight into these minimal ranges for the trendy awards.
Nevertheless, as famous within the introduction, the FWC gave a 6 per cent enhance to the NMW however solely a 4.75 per cent enhance to the minimal stage for the 121 trendy awards.
The traits of those employees incomes minimal award wages are outlined within the FWC Choice and are “totally different to these of the workforce usually”:
1. “they predominantly work part-time hours, are female-dominated, and a majority are casuals.”
2. “they’re disproportionately low-paid, and immigrants from international locations apart from the primary English-speaking international locations and Indigenous Australians are over-represented on this cohort.”
3. They’re 60.6 per cent feminine.
4. They’re youthful than the common of the workforce as a complete (34.1 years in comparison with 41.4).
5. “The wages paid to trendy award-reliant staff represent solely about 11.2 per cent of the nationwide ‘wage invoice’ due to the part-time and low-paid traits of those employees.”
These traits doc the secondary labour market within the Australian financial system – low-paid, casualised jobs with excessive levels of occupational segregation biased in opposition to females and the younger.
Given the low pay and low hours labored relative to the remainder of the financial system, the FWC estimated that the NMW adjustment wouldn’t have a big influence on total wages development within the financial system:
Which means that the general impact of the Overview is proscribed: the 2025 Overview, which awarded a 3.5 per cent enhance, straight contributed not more than 0.36 of a proportion level to total development of three.3 per cent within the Wage Value Index (WPI) to the March
quarter 2026.
Which implies the choice straight improves the outcomes for these low-paid employees however the broader financial efficient of the Annual Wage Overview selections is proscribed.
Which then ought to discourage anybody from believing the employer organisations which have conniptions when the FWC gives some wage aid for the very low paid employees in Australia.
Their claims mirror their very own greed and willingness to take advantage of essentially the most susceptible employees reasonably than being primarily based on any financial evaluation.
A structural realignment was additionally made to the trendy awards
This doc gives a – Fashionable awards truth sheet
In its 2026 resolution, the FWC additionally introduced that along with the 4.75 per cent enhance within the minimal wages to be paid in all trendy awards, they might invoke a focused structural adjustment for the lowest-paid classifications within the award system.
Inside the trendy award system, the so-called C13 stage “is the bottom wage price relevant to ongoing employment”.
Its origins could be traced again to the Manufacturing and Related Industries and Occupations Award.
No employee could be paid lower than that and so it aligns with the NMW.
Under the C13 stage, is the C14 stage, which is “particular entry-level wage price relevant to a restricted preliminary interval of employment” (now not than 6 months).
The FWC introduced that it was phasing:
… out classifications paid on the C13 stage and to make the subsequent wage stage up, the C12 stage, the bottom wage price for ongoing
employment …It will contain the C13 price being elevated by an extra quantity representing one-third of the distinction between the C13 and the C12 charges. The C14 price can be elevated by the identical proportion quantity because the C13 price to take care of its present relativity to C13.
Round 100,000 of the lowest-paid staff can be affected by this realignment.
One ought to perceive that along with trendy awards, employees (in commerce unions) may negotiate enterprise agreements that present for wages greater than the minimal at every classification stage outlined by the trendy awards.
This desk exhibits the traits of the Australian labour power differentiated by those that are reliant on the award wage system and people which might be outdoors of it on enterprise agreements.
Staggered changes in the true world
The primary graph exhibits the annual change in the true worth of the NMW (deflated by the CPI) from 1998 to the September-quarter 2026.
The 2026 enhance can be first paid within the September-quarter 2026 and I used the RBA inflation forecast to deflate that quarters nominal wage stage.
The next graph exhibits the evolution of the true buying energy of the NMW since 2005.
The dotted line is an 8-quarter shifting common to offer a greater information to the pattern.
Now we have extrapolated the present resolution, which applies from July 1, 2026, over the subsequent 12 months (till the subsequent resolution) utilizing RBA inflation forecasts to deflate the nominal NMW.
The acquainted saw-tooth sample is obvious.
I defined this sample intimately on this weblog put up – Australia’s minimal wage rises – however not ample to finish working poverty (June 6, 2017).
Every of the peaks represents a proper wage resolution by the Honest Work Fee in order that on the time of the nominal adjustment (July 1 annually) the true NMW normally rises considerably (maybe not again to the place it was 12 months earlier).
Every interval that the curve heads downwards the true worth of the FMW is being eroded.
That’s, in between the choice intervals, the inflation is on-going and erodes the nominal NMW, that’s adjusted as soon as per yr.
That’s one drawback with these discrete changes and I’d a lot reasonably the FWC constructed into the system, a function that’s frequent on most multi-period bargains, escalation.
That’s, they might simply index wages to the quarterly inflation price which might higher defend actual wages.
You may gauge the annual development in the true wage by evaluating successive peaks.
The selections since 2012 have offered for some modest actual earnings retention by these employees though it relies on how inflation is measured.
You too can see the troughs turned shallower between 2012 and 2016 than previously as a result of the inflation price moderated on account of the GFC and the austerity since that has stored financial exercise at reasonable ranges.
In more moderen years the peak-trough amplitude has risen once more and the NMW changes have did not redress the buying energy erosion to the nominal NMW despite the fact that every adjustment gives some quick actual wage achieve for employees, these positive factors are ephemeral and the inflation course of systematically cuts the buying energy of the NMW considerably by the point the subsequent resolution is due – these are everlasting losses.
You may approximate the cumulative losses between adjustment utilizing half the inflation price between the adjustment factors.
Whereas the small variety of employees on NMW loved an actual wage rise of round 1.7 per cent, the bigger variety of employees (round 22 per cent of all employees) who solely had been awarded a 4.75 per cent enhance, loved a negligible actual wage increase given the present CPI inflation price.
Selection of deflator
The opposite drawback pertains to the suitable measure of inflation.
I talk about that difficulty intimately on this weblog put up – Actual wage cuts proceed in Australia as revenue share rises (Could 15, 2024).
In a nutshell, the FWC makes use of the CPI because the measure.
Nevertheless, the Australian Bureau of Statistics (ABS) recognise that there was a “must develop a measure of ‘the worth change of products and companies and its impact on dwelling bills of chosen family sorts” and so they now publish their so-called Chosen Dwelling Price Indexes (SLCIs), which use expenditure patterns of various cohorts in society (as weights within the index) to evaluate the “the extent to which the influence of value change varies throughout totally different teams of households within the Australian inhabitants”.
Certainly one of their SCLI measures is the Worker Households index.
When CPI inflation stabilises, the 2 indexes are inclined to converge and transfer in tandem.
When the CPI inflation accelerates, the SLCI inflation price will increase at a quicker price and overtakes the CPI inflation price.
For instance within the COVID-19 inflationary episode, the height CPI inflation price was 7.91 per cent recorded within the December-quarter 2022.
In distinction, the height Worker SLCI index peaked at 9.70 per cent two quarters later within the June-quarter 2023.
What this implies is that current nominal wage changes designed to protect actual buying energy that use the CPI because the inflation measure will critically understate the true wage erosion.
The extent of actual wage erosion on the backside
I calculated what the Federal Minimal Wage (NMW) could be had the FWC (and its antecedents) totally listed the NMW from the March-quarter 2016 stage of $A672.70 per week.
I used the CPI and the Worker SCLI to inflate that nominal weekly wage out to the September-quarter 2026, which is when the newest FWC resolution takes impact.
The next graph compares the precise NMW for the reason that March-quarter 2016 with what it might have been in nominal phrases had it grown according to the CPI and the Worker SCLI – that’s, had it been totally listed.
The variations are huge:
1. The nominal NMW within the September-quarter 2026 can be $A1,004.90 per week.
2. If totally listed to the CPI for the reason that March-quarter 2016, it might have been $A2,274.25 per week a distinction of $A1,269.35 per week (nearly double).
3. If totally listed to the Worker SCLI for the reason that March-quarter 2016, it might have been $A2,348.63 per week a distinction of $1,343.73 per week.
Then take into consideration the standard employer submission to the Annual Wage Overview carried out by the FWC.
For instance, The Australian Chamber Commerce and Trade (ACCI), which represents round 400,000 employers demanded the FWC restrict the rise to three.5 per cent.
This was consultant of the claims made by the opposite employer teams.
The next graph traces the ACCI submissions to FWC and converts their proposed most nominal wage will increase for the NMW into the true wage final result (utilizing the CPI)
In nominal wage phrases, the ACCI submissions if profitable (and if we assume annually is unbiased of the final) would ship a nominal NMW in September 2026 of $853.87 per week reasonably than the precise final result of $1,004.90.
Over the interval since June 2019, the precise nominal NMW has elevated by 35.6 per cent in comparison with the CPI of 27.5 per cent.
If ACCI had have had their manner, the nominal NMW would have elevated by solely 16.6 per cent over this era, which means they needed an total actual wage lower to for essentially the most deprived employees of greater than 10 per cent over the 7 yr interval.
It was a interval over which enterprise income reached file ranges.
Lowest-paid employees enhance relative to different employees however all employees nonetheless fail to share in productiveness development
One other perspective is to check the motion within the Federal Minimal Wage with development in GDP per hour labored (which is taken from the Nationwide Accounts).
GDP per hour labored is a measure of labour productiveness and tells us concerning the contribution by employees to manufacturing.
Labour productiveness development gives the scope for non-inflationary actual wages development and traditionally employees have been capable of take pleasure in rising materials requirements of dwelling as a result of the wage tribunals have awarded development in nominal wages in proportion with labour productiveness development.
The widening hole between wages development and labour productiveness development has been a world pattern (particularly in Anglo international locations) and I doc the results of it on this weblog put up – The origins of the financial disaster (February 16, 2009).
However the assault on dwelling requirements has targetted greater than the underside finish of the labour market, though the minimal wage employees have definitely been extra disadvantaged of the prospect to share in nationwide productiveness development than different employees.
The current FWC selections gives some aid to that pattern.
The next graph exhibits the evolution of the true Federal Minimal Wage (purple line), GDP per hour labored (blue line), and the Actual Wage Value Index (inexperienced line), the latter is a measure of normal wage actions within the financial system.
The graph is from the June-quarter 2005 up till September-quarter 2027 (listed at 100 in June 2005 and extrapolated as above out to 2024).
The final identified statement is the March-quarter 2026.
I’ve extrapolated out to the September-quarter 2026 utilizing normal assumptions of regular development in productiveness, and RBA inflation forecasts for the CPI sequence.
By the March-quarter 2026, the precise respective index numbers had been 117.6 (GDP per hour labored), 103.9 (Actual WPI), and 110.3 (actual NMW).
All employees have did not take pleasure in a fair proportion of the nationwide productiveness development. Nevertheless, the latest FWC selections have seen the bottom paid employees enhance their place relative to different employees.
Like all graphs the image is delicate to the pattern used. If I had taken the start line again to the Nineteen Eighties you’d see a really giant hole between productiveness development and wages development, which has been related to the huge redistribution of actual earnings to income over the past three many years.
Conclusion
On Tuesday, the FWC offered for a modest actual wage enhance for the lowest-paid employees in Australia.
In fact, the employers had been aghast on the resolution whereas on the identical time pocketing file income on account of their revenue gouging.
Usual.
That’s sufficient for at present!
(c) Copyright 2026 William Mitchell. All Rights Reserved.
