Minimum Wage Rise: Boon to Workers, But Not to Businesses

Australia’s minimum wage continues to be a major talking point for workers, employers, and policymakers. In 2025, the Fair Work Commission (FWC) announced a 5.75% increase to the national minimum wage, raising it to $24.10 per hour or $915.90 per week for a full-time employee.

This decision directly benefits millions of low-paid workers across sectors like retail, hospitality, childcare, aged care, and construction. However, for many employers—especially small businesses—the rise presents challenges amid inflation, supply chain pressures, and evolving workplace conditions.

Why the Minimum Wage Is Increasing

The Fair Work Commission’s annual wage review considers cost-of-living trends, economic growth, productivity, and employment rates. In 2025, with inflation still elevated and households under financial strain, the Commission justified the increase as essential to maintaining fair living standards for award-reliant workers.

“Real wages for low-paid workers have been eroded by inflation over the past two years. This decision aims to restore some purchasing power without undermining employment growth,” said the FWC in its official statement.

The increase applies from 1 July 2025 and covers all modern awards, with the exception of transitional awards still undergoing review.

Support from Government and Unions

The Department of Employment and Workplace Relations welcomed the decision, noting that the increase aligns with the government’s goals of reducing income inequality and supporting working families facing cost-of-living pressures.

Unions also applauded the rise. The Australian Council of Trade Unions (ACTU) called the increase “a win for fairness” and highlighted that low-income workers are more likely to spend additional earnings in the economy—boosting demand and supporting recovery.

ACTU Secretary Michelle O’Neil said: “This wage increase will make a real difference to workers who need it most—retail staff, carers, cleaners and hospitality workers—many of whom kept the country running during the pandemic and beyond.”

Concerns from the Business Community

However, business and industry groups have warned that the wage hike could strain employers and affect job creation, particularly in sectors still recovering from recent economic volatility.

Australian Chamber of Commerce and Industry (ACCI) Chief Executive Andrew McKellar noted:

“Small and medium enterprises (SMEs) are already facing higher insurance premiums, interest rates, and regulatory costs. An across-the-board wage increase of this size risks squeezing margins and limiting hiring capacity.”

According to ACCI modelling, the wage increase could cost employers up to $3 billion annually when flow-on effects to payroll tax, superannuation, and leave entitlements are factored in.

Construction and Apprenticeship Concerns

Master Builders Australia expressed concern about the impact on apprentices and trainees in the building industry, where entry-level roles are often tied to minimum wage rates.

“We risk undoing progress made in rebuilding the skilled workforce through government apprenticeship programs,” said CEO Denita Wawn. “Higher wage costs may deter employers from taking on junior workers or new apprentices.”

Balancing Equity with Economic Sustainability

The challenge for policymakers is clear: how to ensure that low-paid workers are fairly compensated, while also supporting businesses to remain viable and competitive.

Many experts argue that the best solution lies in targeted workforce investment, such as:

• Improved training and upskilling programs (see Jobs and Skills Australia)
• Wage subsidies for small business apprenticeships and traineeships
• Digital transformation support for SMEs to boost productivity and offset wage costs

If you’re a business owner navigating wage changes, or a worker wondering what this means for your take-home pay, it’s important to stay informed and seek support:

• Workers: Visit Fair Work Australia to check your new pay rates
• Employers: Use Fair Work’s Pay Calculator to stay compliant

Considering a Career Upgrade?

If you’re affected by wage stagnation or seeking better long-term prospects, now might be the time to consider reskilling or upskilling. Explore career pathways in:

• Aged care and community services
• Business and management
• Tech and cybersecurity
• Education and early childhood

Flexible, government-supported online courses can help boost your income potential and make you more competitive in the job market.