The promotion of wages for workers comes to the public sector for the first time in four years to pay private wages.
The Albanese Labour Government is calling on the Fairwork Committee (FWC) to bring about another wage increase for nearly 3 million Australian workers to explain inflation.
In a formal submission ahead of the FWC’s annual decision next month, the government said “we believe workers should proceed with an actual wage increase.”
Currently, the minimum wage is $24.10 per hour, or $915.90 per week, covering 2.9 million workers. Last year, the committee approved a 3.75% increase.
The government has not proposed a specific number, as inflation sits at 2.4%, fundamentally at 2.9% per year.
Since Labor took office, the minimum wage has already increased by $143 per week, with median wages increasing by $206 per week.
The promotion of workers’ wages comes when taxpayer-supported public sector salaries are climbing faster than private sector salaries for the first time in four years.
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However, Treasurer Jim Chalmers and Employment Minister Amanda Richworth defended the regulatory driver as fair and economically sound.
“The increase in minimum wage and award wages is consistent with the sustained remaining inflation within the RBA’s target band and will provide further relief to low-income workers, which is still difficult,” the minister said in a joint statement.
The public sector pays payments that drive national wage growth
The latest data from the Australian Bureau of Statistics, released on May 14, shows that public sector wages have increased by 3.6% over the past year.
Meanwhile, private sector growth slowed to 3.3% from a peak in 2024 4.2%.
Overall wage growth for the March quarter reached 3.4%, but that rise was driven entirely by public sector interests, jumping from 2.9 to 3.6% in just a quarter.
ABS analysts say much of that activity can be attributed to new corporate contracts for nurses, elderly caregivers and educators and an increase in taxpayer-supported.
Employers warn financial pressure
Business leaders have expressed concern over widening public-private wage gaps, increasing economic burdens and public budget warnings.
“Public sector wage agreements are increasingly in contact with the realities of the Australian economy,” said Innes Willox, CEO of the Australian Industry Group.
Willox pointed out that 2024 marked one of Australia’s worst economic years since the recession in the early 1990s.
“Pressure from state governments’ excessive wage trading puts even more pressure on private sector Australian employers who are already struggling with weak market conditions and declining profitability.”
A 2024 report by the KPMG also warned that public sector wage increases are increasingly being undertaken by taxpayers, with little consistency between wage policies and overall economic performance.
The report says that the rise in elderly care, disability and childcare is currently at around $30 billion.
“We continue to increase government spending, adding concerns that there is a continuing disconnect between fiscal and monetary policy.
