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The Fair Work Commission has named cost of living pressures as a primary consideration in its decision to lift minimum wages and award minimum wages by 3.75 per cent.

Taking effect from 1 July, the increase will apply to the estimated 2.6 million employees paid under minimum and award arrangements and was announced today as part of the commission’s Annual Wage Review. 

The increase is lower than last year’s 5.75 per cent increase and the commission noted that inflation was considerably lower now than it was then. 

However, the FWC pointed to the ongoing financial squeeze for low-income earners. 

“In determining this level of increase, a primary consideration has been the cost-of-living pressures that modern-award-reliant employees, particularly those who are low paid and live in low-income households, continue to experience,” it said. 

“Modern award minimum wages remain, in real terms, lower than they were five years ago… and employee households reliant on award wages are undergoing financial stress as a result.” 

The commission said the increase is broadly in line with forecast wages growth this year and is consistent with expectations of a return to inflation below 3 per cent in 2025. 

It said now was not the time to be lifting wages significantly above inflation, “principally because labour productivity is no higher than it was four years ago and productivity growth has only recently returned to positive territory.” 

The pay increase is lower than the 5 per cent rise advocated by the Australian Council of Trade Unions (ACTU). 

The commission rejected this proposal, saying, “The position concerning productivity growth remains highly uncertain…” 

Business groups had argued for smaller increases, ranging from around 2 to 3 per cent. 

Posting on the X platform, ACTU Secretary Sally McManus said when taking tax cuts into account, the increase would mean $2,600 per year for an entry level hospitality worker and $3,200 per year for a level 3 community worker or forklift driver.