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Politics

Australia’s lowest paid workers receive a 3.5% wage increase

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Australia’s lowest paid workers just got a 3.5% wage increase. Their next boost could be even better

Carlos Castilla/Shutterstock

John Buchanan, University of Sydney

A week ago, the Australian Financial Review released this year’s “Rich List”. It reported the number of billionaires in Australia increased from 150 to 166 between 2024 and 2025.

A very different story is happening at the other end of the market. On Tuesday the Fair Work Commission awarded the lowest paid 20% of wage earners a 3.5% increase as a result of its annual review.

The commission acknowledged even with this increase, our lowest paid employees will not be earning as much in real terms as they did before the post-COVID inflationary surge of 2021-2022.

Why such a meagre increase?

In Australia it has long been accepted that – all things being equal – wages should move with both prices and productivity.

Adjusting them for inflation ensures their real value is maintained. Adjusting them for productivity means employees share in rising prosperity associated with society becoming more productive over time.

This “prices plus productivity” model of wage rises is, however, subject to economic circumstances. In recent times the key circumstance of concern has been inflation.

Depending how it is measured it peaked at between 6.5% and 9.6% in 2022-2023.

Since 2022, economic agencies such as the Reserve Bank and state treasuries, along with finance sector economists, have been preaching about the threat of inflation persisting.

Cutting real wages to control inflation

Interest rates were increased to tame the inflation dragon. And these
agencies all issued dire warnings about the threat of long-term inflationary pressure if wages were adjusted to maintain lower and middle income earners living standards.

In its last three decisions the Fair Work Commission accommodated this narrative. Since July 2021 it ensured wages for the lowest paid 20% of employees did not keep up with inflation.

Unsurprisingly, real wages for award-dependent employees fell.

The commission has done its best to look after those on the absolute lowest rates: that is the 1% or so on the national minimum wage.

Their wages have fallen by 0.8% over the period since July 2021. For those in the middle of the bottom 20% of employees dependent on awards the fall has been in the order of 4.5%.

For example, this is the fall experienced by an entry level tradesperson in manufacturing dependent on an award.

Because inflation is currently running at about 2.4%, the 3.5% increase marks a modest 1% real wage gain for a worker on or close to the entry level manufacturing tradesperson rates.

In making this increase, the commission argued if real wage cuts continued, the entrenchment of lower minimum award rates was likely. It noted the economy is in pretty good shape – not just in terms of inflation and employment – but also many firms are turning a profit.

What about productivity?

The other striking feature of the post-COVID economic recovery has been poor productivity performance. It initially went backwards and more recently has flatlined.

The commission rejected arguments recent poor performance in national productivity numbers should prevent raising the minimum award higher than inflation.

It did this because it distinguished between productivity in the market and non-market sectors. In the former, productivity growth has been modest, but positive.

Poor numbers in the non-market sector like health and social services were an artefact of both measurement problems and the need for more workers per unit output to boost the quality of these services.

Silver linings?

It is always a judgement call as to what is the appropriate scale of any wage increase. Given low paid workers were not the source of recent inflationary pressure, it is reasonable to claim now is the time to reverse the recent trends of cutting their real wages.

Whether the increase had to be so modest is something the commission has
indicated it is open to considering in future hearings. It has sent this signal by floating two novel arguments.

The first argument concerns how cuts in real pay are calculated. In its decision it makes the very important point that conventional measures of real wage movements use monthly measures of inflation but wages only increase annually.

It’s on this basis the 4.5% cut for the benchmark entry level trade worker in manufacturing was calculated.

The commission notes, however, that if you take into account wages only rise once a year and inflation rises continuously, the overall loss of earnings power for such workers has been 14.4% since July 2021.

This is a much higher account of real wage cuts than has previously informed debates on wages policy.


FairWork Commission Annual Wage Review 2025, CC BY-NC-ND

Secondly, the commission has noted consideration should be given to phasing out some of the lowest classifications in the award system. This is something it has done in the past.

In this way it does not have to “increase rates” for low paid
classifications as such. Rather, it just eliminates the possibility of having rates for exceptionally low paid jobs – and so raises the base rates dramatically for the lowest paid workers.

Next year, things could be better. Australia has a long history of having a wages system that takes seriously the needs of all workers, and especially the low paid. This decision marks a break with the recent habit of using the lowest paid workers as a shock absorber for macroeconomic policy.

The 3.5% rise is a modest increase but an important one. More important is the framework the commission has set up for decisions in future years. Devising a more accurate measure of real wage cuts and noting the importance of abolishing whole classifications of low paid work lays the foundations for potentially very exciting developments in Australian wages policy in coming years.

John Buchanan, Professor, Discipline of Business Information Systems, University of Sydney Business School, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Sussan Ley sacks Jacinta Price after she refuses to declare leadership loyalty

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Michelle Grattan, University of Canberra

Opposition Leader Sussan Ley has sacked Jacinta Nampijinpa Price from the shadow ministry, citing the senator’s failure to endorse her leadership as well as her refusal to apologise over her comment about Indian immigrants.

The battle with Price came to a head late on Wednesday, after Price declined to express conference in Ley’s leadership when pressed by reporters in Perth. Price said that was “a matter for our party room”.

Ley told a press conference in Hobart: “Today, Senator Jacinta Nampijinpa Price critically failed to provide confidence in my leadership of the Liberal Party. Confidence in the Leader is a requirement for serving in the shadow ministry”.

Ley also said despite being given “the time and space to apologise” for her remarks about Indian immigration, Price “did not offer an apology today – and many Australians, not just of Indian heritage, have been calling for that apology – for remarks that were deeply hurtful”.

Last week Price said the Labor Party encouraged Indian immigrants because they voted for it. She has subiquently walked back her position but steadfastly refused calls from within and outside the Liberal Party to apologise for them.

Ley said: “My team and I have been out listening to Australians of Indian heritage and we have heard their response and the pain and hurt that these remarks provided for them.”

After Ley told her she was out of the shadow ministry, Price said in a statement, “this has been a disappointing episode for the Liberal Party. I will learn from it. I’m sure others will too. No individual is bigger than a party. And I’m sure events of the past week will ultimately make our party stronger.”

Price has been shadow minister for defence industry. She defected from the Nationals to the Liberals after the election, hoping to become deputy opposition leader on a ticket with Angus Taylor. In the event, she did not contest the deputy position after Taylor lost to Ley.

Price’s relegation to the backbench leaves her free to speak out, not just on immigration issues but on many other issues as well, including the party debate on its commitment to net zero greenhouse emissions.

Ley hopes her action against Price will shore up her authority in the party, but it remains to be seen whether it could instead be destabilising for her.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Coalition declares it would revoke Australia’s Palestinian statehood recognition if it wins office

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Coalition declares it would revoke Australia’s Palestinian statehood recognition if it wins office

Michelle Grattan, University of Canberra

The bipartisanship about the path to a long-term settlement in the Middle East has finally been irrevocably broken.

The shadow cabinet, meeting Tuesday morning, did not just confirm the Coalition’s disagreement with the government’s decision to recognise a Palestinian state. It also decided that recognition would be revoked by a Coalition government.

In a statement after the shadow cabinet, Opposition Leader Sussan Ley and the shadow foreign minister, Michaelia Cash, said: “A Coalition government would only recognise a Palestine state at the conclusion of a proper peace process”.

On Monday, Prime Minister Anthony Albanese announced Australia would recognise a Palestinian state at the United Nations General Assembly next month. The government is not putting preconditions on recognition, but is relying on assurances the Palestinian Authority has given.

In its statement, the opposition said Albanese had specified recognition was “predicated on there being no role for Hamas; the demilitarisation of Palestine; an acknowledgement of Israel’s right to exist; free and fair elections in Palestine; and, reform of [Palestinian] governance, financial transparency and the education system, including international oversight to guard against the incitement of violence and hatred”.

But, the Coalition said, “unfortunately the Albanese government has made it clear that they will still recognise a Palestinian state, regardless of whether or not their own conditions are met.”

Former Prime Minister Scott Morrison said that in government, the Coalition had listed Hamas as a terrorist organisation. “Our Labor successors have regrettably rewarded them through this action.

“I know this is not their intention, but it is the result. The caravan of appeasement is not one we should join”, Morrison said on his website.

While the split in bipartisanship has come to a head this week, it has been in the making for a considerable time.

The Coalition has been steadfastly rusted onto Israel (despite having some members, including Ley, who in the past had expressed support for the Palestinians).

In recent years, Labor has become increasingly divided between those wanting to stick to its traditional alignment with Israel and a growing number of pro-Palestinian supporters, who eventually succeeded in getting recognition of a Palestinian state into the party’s platform.

In the recent election, the Liberals pitched to and attracted many Jewish voters, while Labor was concerned with keeping the support of its Muslim constituency, located especially in western Sydney.

The government’s criticism of Israel’s approach to the war has intensified as the conflict has dragged on with no sign of resolution.

Once the current conflict reached its present impasse, with ever-more graphic footage of the suffering in Gaza, and countries such as France, Britain and Canada signalling Palestinian recognition, it was almost inevitable the Albanese government would follow, and the Coalition would oppose that decision.

The government argues something has to be done. It chooses to believe assurances given by the Palestinian Authority. It speaks as though the intractable players in this Middle East conflict can be influenced, even though the ongoing conflict makes this a heroic assumption.

Albanese undertook a round of Tuesday interviews to defend the government’s decision. Often reluctant to spell out the content of private conversations with overseas counterparts, the prime minister is being expansive about his conversation last Thursday  with Israeli Prime Minister Benjamin Netanyahu.

“It was a conversation which reflected the conversation that I had with him in 2024. And I expressed to him my concern that he was putting the same argument that he did in 2024, that military action against Hamas would produce an outcome. That hasn’t produced an outcome. What it’s produced is a lot of innocent lives, tens of thousands of innocent lives being lost.

“I expressed my concern about the blocking of aid that occurred  as a conscious decision by the Israeli government  earlier this year,” Albanese said.

“He again reiterated to me what he has said publicly as well, which is to be in denial about the consequences that are occurring for innocent people.”The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Anthony Albanese marches cautiously towards Palestinian recognition

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Grattan on Friday: Anthony Albanese marches cautiously towards Palestinian recognition

Michelle Grattan, University of Canberra

Treasurer Jim Chalmers has been putting it succinctly, declaring it’s a question of when, not if, Australia recognises Palestine as a state.

It’s a line Foreign Minister Penny Wong used more than a year ago. This week Wong was sounding impatient. “The reason for urgency behind recognition is this. There is a risk there will be no Palestine left to recognise if the world does not act,” she said.

For the government, recognition is as much about domestic politics as foreign policy. Australia has no influence on what’s happening in the Middle East (other than donating aid). But the Australian public is increasingly horrified by the images of the humanitarian crisis.

It’s a reminder of the power of the visual. More than half a century ago, the pictures coming out of Vietnam helped turn the US public against that war.

Right now, however, Australia remains in limbo on its journey towards recognition. The destination might seem clear but the exact arrival date is less so.

Observers are expecting it by the time of the United Nations General Assembly in late September. Anthony Albanese will be there, delivering an address during leaders’ week. The announcement could be made in the run up, or in that week.

France, the United Kingdom and Canada have all flagged recognition, the latter two with varying conditions attached.

Asked in late July about whether Australia would announce recognition at the UN, Albanese said Australia would make a decision “at an appropriate time”.

“We won’t do any decision as a gesture. We will do it as a way forward if the circumstances are met,” he said. He spelled out a couple of these. “How do you exclude Hamas from any involvement there? How do you ensure that a Palestinian state operates in an appropriate way which does not threaten the existence of Israel?”

In any likely scenario, there will be no positive answers to those questions in the foreseeable future. Nor does there seem, so far, much chance the Netanyahu government in Israel will take much notice of more countries recognising Palestine. The only country, if any, it appears likely to be influenced by is the United States, and President Donald Trump’s future actions are unpredictable.

But, leaving aside the prime minister’s longstanding personal pro-Palestinian views, Albanese has to be seen to be doing something. Pressure has been long mounting in the Labor base and among the party membership for recognition. The Sydney Harbour Bridge march last weekend, attracting at least some 90,000 people (march organisers estimated many more), reemphasised to Albanese that he needs to be in tune with his base on this issue.

An instructive lesson comes from the situation in which NSW Labor Premier Chris Minns finds himself. Minns and the NSW police opposed the march going over the bridge on the grounds it would be too disruptive – they were overridden by a court decision. But ten of Minns’ caucus members marched, including environment minister Penny Sharpe.

In the federal caucus, Ed Husic, now on the backbench, is out in front on Palestine recognition. But whatever impatience there may be in caucus generally about the government’s perceived slowness, it is so far being contained. Still, Albanese won’t want to lag behind his colleagues on what is an electorally sensitive issue for Labor in some seats.

As the government prepares its timing, Albanese has embarked on a diplomatic round. It was not unexpected that he spoke with French President Emmanuel Macron this week. More surprising was his phone call with the Palestine Authority’s President Mahmoud Abbas, who is widely regarded as a discredited figure.

According to the official readout from the Prime Minister’s Office, Albanese “reiterated Australia’s call for the immediate entry of aid to meet needs of people of Gaza, a permanent ceasefire, and the release of all hostages”.

Albanese “also reinforced Australia’s commitment to a two state solution because a just and lasting peace depends upon it”. Abbas thanked the PM “for Australia’s economic and humanitarian support. The leaders discussed deepening cooperation across a range of areas, and agreed to meet on the sidelines of the United Nations General Assembly.”

If Albanese made the point directly to Abbas that the Palestinian Authority needed to reform itself to have a role in a future Palestinian state, it was not recorded in the readout. But Albanese did tell a news conference on Thursday, “We as well want to see commitments from the Palestinian Authority, commitments of their governance reforms, of reforms in education, reforms across a whole range of issues”.

Before that conversation, Albanese had sought a call with Israeli Prime Minister Benjamin Netanyahu. As of Thursday, the call had not yet come.

Israeli authorities can be quick to respond to what they see as anti-Israel events in Australia. There was a social media post from the Israeli foreign minister after the bridge march, urging Australians to “wake up”.

On Thursday, Albanese was asked whether he would talk with Trump before he made the decision about Palestinian recognition. “We’re a sovereign government and Australia makes decisions on behalf of the Australian government,” he said.

Incidentally, while there has been speculation that Albanese will catch up with Trump when he is in the US in September, there don’t seem any locked-in plans.

It’s hard to get the president’s time in Washington when so many leaders are knocking on the White House door in September. And there is no guarantee the president will be in New York during the leaders’ week at the UN, or have an opportunity for a meeting if he is. When the prime minister will catch up with the president continues to be a work in progress.

The opposition, which has remained steadfastly signed up to Israel, strongly opposes Palestinian recognition, saying this would be a win for Hamas. But at least some Liberals are readjusting their rhetoric to take more account of the humanitarian disaster in Gaza.

If, or when, Labor recognises a Palestinian state, the opposition would condemn the decision. But what would it say about whether a Coalition government would reverse the decision? That might be one for the convenient line, “we’d look at that when we were in office”.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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