Inflation spike casts a shadow over minimum wage debate

May 25, 2026 — 5:00am

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It’s standard for the demands of unions to clash with those of employer groups. But arguments made before the Fair Work Commission last week over how much the minimum wage should rise in the coming financial year have revealed tensions within the demands of both groups.

The pay bump, which will be announced by the fair work arbiter next month, and which applies to the country’s lowest paid workers from July 1, risks falling short of the higher living costs Australians are facing. But a wage increase that is too high could feed into price pressures that the Reserve Bank and the federal government have flagged will spike in the coming year, amid tensions in the Middle East.

Even if the conflict resolves within months, both the RBA and the Treasury think inflation will climb, hitting 4.8 per cent by June according to RBA forecasts, and 5 per cent according to the latest federal budget.

As usual, the unions are driving a hard bargain. After seeing the numbers from the federal budget, the Australian Council of Trade Unions this month increased its minimum wage claim from 5 per cent to 6 per cent, arguing it is necessary to shield lower-paid workers from inflationary pressures.

Employer groups, meanwhile, want wage rises to be weaker. The Australian Industry Group........

© The Age