On Might 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 focus on their analysis intimately at one other time however the outcomes are gorgeous. In a inhabitants of 28 million, the “20 richest Australians maintain extra wealth than the underside three million households”. Whereas many of the inhabitants are fighting “rising rents, grocery costs and vitality payments”, the top-end-of-town have had a “bumper 12 months” rising their wealth by round $A50,000 per minute. That ought to body our response to Tuesday’s (June 2, 2026) determination – 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 supplies for some modest actual wage enhance for the bottom paid staff in Australia. In fact, the employer teams are up-in-arms as common claiming that the rise (and flow-ons – see beneath) will devastate employment development and all the standard bunk as they publish file earnings. Fortuitously, the FWC largely ignored the bleating of the bosses. However in contrast to what’s occurring on the prime of the earnings and wealth distribution, this modification to the NMW is trivial to say the least.
On this weblog publish – 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 way in which 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 usually are not lined by a contemporary award or an enterprise settlement. Such individuals represent, at finest, solely a small fraction of the workforce.
There are about 100,000 staff on this class.
The FWC additionally units “minimal wage charges prescribed by trendy awards” throughout business sectors and these selections influence on a a lot bigger proportion of the accessible workforce – these deemed to be ‘trendy award reliant’ staff – which implies that they’re being paid beneath 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 beneath a contemporary award and are thus straight affected by Overview selections.
There are 121 trendy awards within the Australian industrial construction.
The apply is that when the NMW is modified, that call then flows straight into these minimal ranges for the fashionable awards.
Nonetheless, 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 degree for the 121 trendy awards.
The traits of those staff incomes minimal award wages are outlined within the FWC Resolution and are “totally different to these of the workforce typically”:
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 aside from the principle 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 an entire (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 staff.”
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 general wages development within the financial system:
Because of this 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 general development of three.3 per cent within the Wage Worth Index (WPI) to the March
quarter 2026.
Which suggests the choice straight improves the outcomes for these low-paid staff 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 supplies some wage aid for the very low paid staff in Australia.
Their claims replicate their very own greed and willingness to use probably the most weak staff moderately than being based mostly on any financial evaluation.
A structural realignment was additionally made to the fashionable awards
This doc supplies a – Fashionable awards reality sheet
In its 2026 determination, 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’d invoke a focused structural adjustment for the lowest-paid classifications within the award system.
Inside the trendy award system, the so-called C13 degree “is the bottom wage price relevant to ongoing employment”.
Its origins might be traced again to the Manufacturing and Related Industries and Occupations Award.
No employee might be paid lower than that and so it aligns with the NMW.
Under the C13 degree, is the C14 degree, which is “particular entry-level wage price relevant to a restricted preliminary interval of employment” (not than 6 months).
The FWC introduced that it was phasing:
… out classifications paid on the C13 degree and to make the following wage degree up, the C12 degree, the bottom wage price for ongoing
employment …This may 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 will probably be elevated by the identical proportion quantity because the C13 price to keep up its present relativity to C13.
Round 100,000 of the lowest-paid staff will probably be affected by this realignment.
One ought to perceive that along with trendy awards, staff (in commerce unions) also can negotiate enterprise agreements that present for wages larger than the minimal at every classification degree outlined by the fashionable awards.
This desk exhibits the traits of the Australian labour drive differentiated by those that are reliant on the award wage system and people which are exterior 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 will probably be first paid within the September-quarter 2026 and I used the RBA inflation forecast to deflate that quarters nominal wage degree.
The next graph exhibits the evolution of the true buying energy of the NMW since 2005.
The dotted line is an 8-quarter transferring common to offer a greater information to the development.
We’ve got extrapolated the present determination, which applies from July 1, 2026, over the following 12 months (till the following determination) utilizing RBA inflation forecasts to deflate the nominal NMW.
The acquainted saw-tooth sample is evident.
I defined this sample intimately on this weblog publish – Australia’s minimal wage rises – however not ample to finish working poverty (June 6, 2017).
Every of the peaks represents a proper wage determination by the Honest Work Fee in order that on the time of the nominal adjustment (July 1 every year) 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 12 months.
That’s one downside with these discrete changes and I’d a lot moderately the FWC constructed into the system, a function that’s frequent on most multi-period bargains, escalation.
That’s, they may simply index wages to the quarterly inflation price which might higher defend actual wages.
You’ll be able to gauge the annual development in the true wage by evaluating successive peaks.
The selections since 2012 have supplied for some modest actual earnings retention by these staff though it is determined by how inflation is measured.
You may also 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 saved financial exercise at average ranges.
In more moderen years the peak-trough amplitude has risen once more and the NMW changes have didn’t redress the buying energy erosion to the nominal NMW regardless that every adjustment supplies some speedy actual wage acquire for staff, these positive factors are ephemeral and the inflation course of systematically cuts the buying energy of the NMW considerably by the point the following determination is due – these are everlasting losses.
You’ll be able to approximate the cumulative losses between adjustment utilizing half the inflation price between the adjustment factors.
Whereas the small variety of staff on NMW loved an actual wage rise of round 1.7 per cent, the bigger variety of staff (round 22 per cent of all staff) 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 downside pertains to the suitable measure of inflation.
I focus on that problem intimately on this weblog publish – Actual wage cuts proceed in Australia as revenue share rises (Might 15, 2024).
In a nutshell, the FWC makes use of the CPI because the measure.
Nonetheless, the Australian Bureau of Statistics (ABS) recognise that there was a “have to develop a measure of ‘the value 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”.
One in all their SCLI measures is the Worker Households index.
When CPI inflation stabilises, the 2 indexes are likely 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) can be had the FWC (and its antecedents) absolutely listed the NMW from the March-quarter 2016 degree 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 determination 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 consistent with the CPI and the Worker SCLI – that’s, had it been absolutely listed.
The variations are huge:
1. The nominal NMW within the September-quarter 2026 will probably be $A1,004.90 per week.
2. If absolutely 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 absolutely 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 everyday 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 end result (utilizing the CPI)
In nominal wage phrases, the ACCI submissions if profitable (and if we assume every year is unbiased of the final) would ship a nominal NMW in September 2026 of $853.87 per week moderately than the precise end 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 means, the nominal NMW would have elevated by solely 16.6 per cent over this era, which means they needed an general actual wage minimize to for probably the most deprived staff of greater than 10 per cent over the 7 12 months interval.
It was a interval over which enterprise earnings reached file ranges.
Lowest-paid staff enhance relative to different staff however all staff 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 in regards to the contribution by staff to manufacturing.
Labour productiveness development supplies the scope for non-inflationary actual wages development and traditionally staff have been capable of get pleasure from 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 development (particularly in Anglo international locations) and I doc the implications of it on this weblog publish – 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 staff have actually been extra disadvantaged of the prospect to share in nationwide productiveness development than different staff.
The current FWC selections supplies some aid to that development.
The next graph exhibits the evolution of the true Federal Minimal Wage (purple line), GDP per hour labored (blue line), and the Actual Wage Worth Index (inexperienced line), the latter is a measure of basic 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 recognized remark is the March-quarter 2026.
I’ve extrapolated out to the September-quarter 2026 utilizing customary 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 staff have didn’t get pleasure from a justifiable share of the nationwide productiveness development. Nonetheless, the newest FWC selections have seen the bottom paid staff enhance their place relative to different staff.
Like all graphs the image is delicate to the pattern used. If I had taken the place to begin again to the Eighties you’d see a really massive hole between productiveness development and wages development, which has been related to the large redistribution of actual earnings to earnings over the past three a long time.
Conclusion
On Tuesday, the FWC supplied for a modest actual wage enhance for the lowest-paid staff in Australia.
In fact, the employers had been aghast on the determination whereas on the identical time pocketing file earnings on account of their revenue gouging.
Standard.
That’s sufficient for at the moment!
(c) Copyright 2026 William Mitchell. All Rights Reserved.
