Government Wants Your Pay Rise Above Inflation — 2026 Wage Review Explained

The Albanese Government has formally submitted to the Fair Work Commission's 2026–27 Annual Wage Review, calling for award wages to increase by more than the rate of inflation.

Minister for Employment Amanda Rishworth and Treasurer Jim Chalmers lodged the submission this week. It covers the 2.7 million Australian workers whose pay is set by modern awards — that's roughly one in four workers across the country.

In plain terms: the government is telling the independent umpire that low-paid workers deserve a real pay rise, not just one that keeps up with prices.

This matters because annual wage growth is currently sitting at 3.4%, while inflation is running at 3.8%. That means in real terms, most workers are actually going backwards — earning more dollars but buying less stuff.

The submission argues that the lowest-paid workers should not bear the brunt of cost-of-living pressures. Specifically, the government wants:

• Above-inflation increases for workers on the national minimum wage and modern awards
• A continued focus on gender pay equity — women are disproportionately represented in low-paid award industries like aged care, retail, and hospitality
• Recognition that low-paid workers have less capacity to absorb rising costs for fuel, rent, and groceries

The government hasn't put a specific percentage on the table — that's deliberate. The Fair Work Commission is independent, and the submission is framed as a recommendation, not a directive.

For context, last year's review delivered a 3.75% increase to the national minimum wage, bringing it to $24.10 per hour. An above-inflation increase this time around could mean something in the range of 4–5%, though that's speculation at this stage.

You can check your current award rate using our minimum wage calculator or look up your occupation's typical pay range with the salary benchmark tool.

Not everyone's thrilled. The Australian Industry Group (Ai Group) — the peak employer body — has pushed back hard.

Their argument boils down to three things:

• Tariffs are hurting businesses: New and expanded tariffs are increasing input costs across manufacturing, construction, and retail supply chains. Businesses are already absorbing higher costs before wages even come into it.
• Fuel prices are out of control: With the national average above $2.19/L and regional areas hitting $3+, transport and logistics costs are flowing through to every sector.
• Inflation could get worse: Ai Group warns that if wages jump too fast, it could push inflation towards 5% by mid-year, triggering more RBA rate hikes — which ultimately hurts the same workers the government is trying to help.

Small business groups have echoed similar concerns. The Council of Small Business Organisations Australia (COSBOA) noted that many small businesses are already struggling to keep staff on current wages, and a big increase could lead to reduced hours or job cuts rather than higher pay packets.

If you've never paid attention to this process before, here's the short version:

1. Submissions open — unions, employer groups, government, and anyone else can put their case to the Fair Work Commission
2. Consultations and hearings — the Commission hears arguments from all sides, reviews economic data, and considers research on living costs
3. Decision handed down — usually in May or June
4. New rates take effect — typically from the first full pay period on or after 1 July

The Commission is required by law to consider things like the needs of the low-paid, promoting social inclusion, the performance of the national economy, and the principle of equal remuneration.

It's worth noting that the Commission doesn't have to follow what the government says. In 2023, for example, the government asked for a "meaningful increase" and got 5.75% — more than many expected. Last year they asked for a "real increase" and got 3.75%.

Based on the usual timeline:

• March–April 2026: Submissions from all parties (we're here now)
• April–May 2026: Hearings and consultations
• Late May or June 2026: Decision announced
• 1 July 2026: New minimum and award rates kick in

We covered earlier predictions for this review in our article on minimum wage review 2026 predictions — some of those forecasts are now looking pretty close to the mark.

Whether you're on an award, the minimum wage, or an enterprise agreement, here's what's worth doing:

• Check your current rate: Use the pay calculator to make sure you're actually getting what you're entitled to right now. Underpayment is still rampant — don't wait for a pay rise if you're already being short-changed.
• Know your award: The increase only applies to modern award rates and the national minimum wage. If you're on an enterprise agreement or individual contract, your employer doesn't have to pass on the increase (though many do to stay competitive).
• Check what others earn: Our salary benchmark tool covers 428 occupations with ATO and ABS data. If you're being paid well below the median, a wage review increase alone won't fix that — you might need to negotiate.
• Watch for the decision: We'll update our calculators the moment new rates are announced. Bookmark the minimum wage calculator so you can check your new rate as soon as it drops.

The bottom line: the government wants your pay to go up by more than prices. Employers say they can't afford it. The Fair Work Commission will decide. Either way, knowing your current entitlements puts you in a stronger position — regardless of what the umpire rules.