Employers slam union proposal as 'self-defeating'
The Australian Council of Trade Unions (ACTU) has announced that it is seeking a five per cent increase to the minimum wage in a new proposal that employers slammed as "self-defeating."
ACTU's submission to the upcoming Annual Wage Review is proposing to lift Australia's minimum wage to $26.19 per hour, raising the annual full-time rate by $2,465 to $51,761.
The union attributed the increase to cost-of-living pressures, such as rent and power prices, in addition to high petrol prices and a hike in interest rates amid the conflict in the Middle East.
"Everyone knows the lowest paid workers in Australia are doing it tough because they have borne the brunt of cost-of-living increases as landlords put up rent and supermarkets and fuel companies pumped up prices to inflate their profits," said ACTU Secretary Sally McManus in a statement.
"Working Australians need pay rises that get them ahead of inflation so they can continue to catch up."
'Self-defeating' wage hike proposal
But employers across Australia criticised the union's proposal as unjustified, warning that a five-per-cent wage hike will only add to inflation.
"We think a claim for five per cent or more increase in wages by the ACTU, that's self-defeating. It can't be justified in the economic circumstances," said Andrew McKellar, chief executive officer of the Australian Chamber of Commerce and Industry (ACCI), on Tuesday.
Australia's Consumer Price Index rose 3.7% in the 12 months to February 2026, according to the Australian Bureau of Statistics.
But economists warn that the conflict in the Middle East can drive headline inflation to 4.6% in the June quarter before it eases back to 3.9% by year-end.
McKellar warned that a five per cent minimum wage hike will only "tip fuel onto the inflation fire that we're already seeing."
"That'll only put higher pressure on interest rates in the months ahead," he added. "So, we think it's completely unjustified. It won't be good for the Australian economy."
The ACCI will be proposing an increase of around 3.5%, according to McKellar. They aim to submit the proposal to the Fair Work Commission by the end of the week.
"We would say that's justified on the basis that you have an increase for inflation, which is within the range of the Reserve Bank's target band between two and three per cent," McKellar said.
"Some allowance for productivity that we've seen growing at about one per cent across the economy in the past year. So we say 3.5% is a fair outcome, a reasonable outcome, a responsible outcome."
Role of wages in inflation
The role of wage increases in inflation has long been the centre of debate between employers and unions during wage reviews.
While employers have insisted that a major increase in wages will drive inflation, unions have disagreed.
McManus, in ACTU's latest proposal, said the driver of inflation is the cost of housing and petrol companies' price gouging.
"Working people's pay rises played no role," the ACTU secretary added. "Action to cut negative gearing and capital gains tax discounts for professional landlords would drive down housing inflation."
Recent research from The Australia Institute also noted that wages play a shrinking role in the country's inflation resurgence.
"The spike in inflation forecast to happen in the year to June 2026 is entirely due to non‑wage factors such as company and business profits," the think tank's research previously said.
"The data is clear that the cause of the spike in inflation lies elsewhere, and further rate rises will only serve to hurt workers who have been wrongly blamed for inflation."
