Fair Work Commission pegs real wage for award-reliant employees at 1 July 2025 level

Modern award wage rates will be increased by 4.75%, effective from 1 July 2026 following the Fair Work Commission (FWC) decision today.

In addition, modern awards that have a C13 level will see that level phased out, resulting in the lowest wage rate in the modern award system applicable to ongoing employment being $1,004.90 per week or $26.44 per hour, and the lowest wage rate applicable to entry-level employment for a period of no more than 6 months being $978.10 per week or $25.74 per hour.

The increase in national minimum wage will affect the one in five Australian employees and their employers who are paid (or pay) wages at the applicable minimum wage rate under a modern award. Over 60% of these employees are female, more than 70% work part-time hours and more than half are casual employees. Over two-thirds of all modern award-reliant employees work in accommodation and food services, health care and social assistance, retail trade, and administrative and support services.

The FWC noted that until February this year, there was healthy economic growth and growth in jobs and hours worked, productivity, and business profits and investment during 2025, while wages growth remained moderate and real unit labour costs did not increase. However, due to capacity constraints in the latter half of 2025, the rate of inflation increased by more than forecast, to be well above the Reserve Bank target band. The Middle East conflict has accelerated inflation.

This has expanded the ‘real wage gap’ between the rate of the CPI and modern award wage rates, affecting the living standards of the low paid and their capacity to meet their needs. The FWC declined to award a real wage increase for employees reliant on modern award wage rates that would be sufficient to close the real wage gap entirely. However, it considered it should at least ensure that modern award-reliant employees generally are not worse off in real terms than they were as at 1 July 2025.

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