Union calls for 4.5% minimum wage increase, state governments won’t put figure on it

The ACTU has tabled its submission to the annual wage review, calling for a 4.5 per cent increase. Meanwhile, state governments are in support of a wage increase – but won’t say how much.

As the submissions to the Fair Work Commission’s (FWC) annual wage review continue, varying opinions on the needed changes to Australian wages are piling in – with the Australian Council of Trade Unions (ACTU) claiming the highest submitted increase figure.

Just yesterday (3 April), ACTU secretary Sally McManus announced that the union would be putting forward a 4.5 per cent wage boost to the FWC – an increase from the 3.75 per cent increase that was introduced last year for minimum wage earners. This suggestion would inevitably raise the minimum wage to $25.18 per hour, lifting the annual full-time rate by $2,143 to $49,770.

“Australia’s lowest-paid workers need and deserve a decent real wage increase,” McManus said.

“We must remember that our minimum wage for a full-time adult worker is only $47,626 a year. It is not enough and needs to increase. We are not America, and no one should be left without a livable wage after working full-time hours.

“A 4.5 per cent rise for 2.6 million award-reliant workers is what they need to get ahead of inflation caused by global supply problems and price gouging by the likes of supermarkets and insurance companies.”

Often at odds with the viewpoint of the ACTU, the Australian Chamber of Commerce and Industry (ACCI) also filed a submission with a proposal of a 2.5 per cent increase.

“An increase in minimum and modern award wages of no more than 2.5 per cent is fair and reasonably responsible in the current economic environment,” said ACCI chief executive Andrew McKellar.

“To be sustainable, any increase in wages must be linked to productivity. Yet, labour productivity has been contracting, down 1.2 per cent in 2024 and averaging near zero over the past five years.

“Failure to align wages growth with genuine productivity improvements risks exacerbating economic challenges and will rekindle inflationary pressure.”

Fellow employer group, the Australian Industry Group (Ai Group), also tabled a submission that suggested a 2.6 per cent increase that “reflects Australia’s weak economic and productivity conditions”.

“In recent years, high inflation resulted in very large increases to minimum wages. But in 2025, the balance of economic factors has squarely shifted, warranting a far more moderate approach from the commission this year,” said Innes Willox, Ai group chief executive.

“A proposal higher than 2.6 per cent is completely unjustified.”

One of the common retorts expressed by business or employer groups when the issue of wage increases is broached often relies on the stagnant growth of productivity. With the release of the second Reserve Bank rate cut occurring this week, however, RBA governor Michele Bullock added credibility to the productivity remarks.

“If productivity didn’t pick up, then that means that the rate of nominal wages growth that can be sustained and be in line with the inflation target is lower,” Bullock said.

Meanwhile, Minister for Employment and Workplace Relations Murray Watt recently told the Australian Financial Review that it’s an incorrect statement to claim that you cannot have wage increases without “stronger productivity growth”.

As the Fair Work Commission conducts its review, it’s clear that the intertwinement between productivity and wage increases will be a focal point throughout the process.

State governments don’t reveal figure

Both the South Australian and Victorian governments filed their own submissions, with both the state governments calling for “real wages growth”.

The Victorian government put in a call for a return to pre-COVID above-inflation increases – similar to the Albanese government’s proposal.

“The Victorian government submits that in this year’s AWR, there should be a return to the path of real wages growth, returning to pre-COVID trends, which saw the growth in minimum wages exceed headline inflation,” it said.

“The past four minimum wage increases were either equal to or lower than inflation, contrary to pre-pandemic trends where the AWR delivered wage growth exceeding the consumer price index (CPI).”

In its submission to the FWC, the South Australian government also peddled the intertwinement between productivity gains and wage increases.

“The South Australian government recommends that the panel adopt a balanced and sustainable approach, which reflects the relationship between real wages growth and labour productivity growth, while being mindful of the ongoing risk of re-igniting inflation growth,” it said.

“The panel [should] adopt a balanced and sustainable approach ... mindful of the ongoing risk of re-igniting inflation growth.”

Both state governments were reluctant to present a specific wage figure for the increase, just like the Albanese government.

In defence of the missing specific figure from the submission, Albanese told reporters that “we have never put figures on our submissions”.