The Fair Work Commission has announced a 3.5 per cent increase to the National Minimum Wage and minimum award wages.
The raise will take effect from the first full pay cycle starting on or after July 1, 2025.
As the first real wage increase since 2021, it’s a win for workers – though business advocates are unhappy. Organisations like Cosboa, ACCI, and the AI Group generally wanted no more than a 2.5 per cent increase.
“Today’s decision of a 3.5 per cent increase – which is above the current rate of inflation – will have ramifications for our small-business engine room,” said Cosboa CEO Luke Achterstraat.
What will this really mean for business?
The wage rise will only apply to about 20 per cent of the workforce, according to CreditorWatch Chief Economist Ivan Calhoun. If your employees are on individual contracts, you won’t have to foot the bill. You may, however, see a spending increase – typically a wage rise increases consumer spending and promotes some economic growth.
On the other hand, business advocates are worried about the impact on small businesses specifically – particularly because the raise coincides with an increase to the super guarantee, also from July 1.
Cosboa CEO Luke Achterstraat said many owners will need to personally absorb the higher wage costs if they are unable to pass them on to customers.
“Someone needs to pay here, and overwhelmingly that will be small business,” said Achterstraat.
There’s also the matter of ongoing uncertainty from trade and tariffs, plus continued low productivity growth. Calhoun said that these factors likely restrained the Commission from an even higher wage rise, but the burden on businesses will still increase.
“Living costs and business costs remain very elevated and have been a very large part of the pressures on many businesses in this cycle,” he said. “The rise makes it more important that businesses pursue productivity improvements.”
