A minimum wage increase delivers a maximum inflation risk

June 2, 2026 — 3:55pm

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The Reserve Bank’s job to bring inflation was just made more difficult by the Fair Work Commission.

No matter how you couch it and the reasons for it, the 4.75 per cent increase in the minimum wage is a risk that the economy – and the Reserve Bank – just did not need.

If you think 4.75 per cent is sizeable, that’s because it is. It’s the third-largest increase since the Global Financial Crisis (during which the commission’s predecessor, the Fair Pay Commission, froze wages for the lowest paid).

In dollars and cents, it takes the full-time minimum wage beyond the $1000 mark to more than $52,000 a year. An important caveat is that about 70 per cent of those on the minimum wage are part-time workers with a sizeable chunk casual.

While about a fifth of the workforce is affected, their pay is so low that it accounts for just 11 per cent of the national wage bill.

But the increase is so large that it will deliver a measurable increase in the Reserve Bank’s key measures of wage growth and labour costs.

Fair Work Commission lifts minimum wage by 4.75 per........

© The Sydney Morning Herald