Australia to raise minimum wage by 4.75% from July amid inflation concerns

Australia's Fair Work Commission announced today that the minimum wage for approximately 2.8 million workers across Australia will increase by 4.75% starting in July, though some analysts believe this move could further exacerbate inflationary pressures in the country.

According to Reuters, the Fair Work Commission announced that the minimum weekly wage will rise to 1,004.90 AUD (approximately 21,000 TWD) starting July 1, with the hourly rate increasing to 26.44 AUD. This increase is higher than last year's 3.5% and 2024's 3.75%, but remains below the 5% to 6% target sought by unions.

The Fair Work Commission stated that the tightening monetary policy implemented by the Reserve Bank of Australia (RBA) will undoubtedly lead to an economic slowdown within the next year. It also noted that the US-Iran conflict has affected crude oil supplies, causing inflation to continue to rise.

The commission pointed out that based on various considerations, providing "real wage growth" to employees is neither feasible nor responsible, but it should at least ensure that workers' living standards are not worse than last year.

Australia's Consumer Price Index (CPI) inflation rate for the first quarter of this year was 4.1%, and it is expected to climb to a peak of 4.8% in June, far exceeding the RBA's target range of 2% to 3%.

Analysts at Citigroup stated that given this wage decision combined with existing cost pressures in the economy, they are more convinced that the RBA will raise interest rates for the fourth time this year in August, with rates expected to rise to 4.6%.

"We have noted the upside risk to inflation in the second half of the year, a situation that will persist for months to come. Raising the minimum wage will only further increase the cost pressures on businesses already burdened by the Middle East conflict," Citi said.

Due to soaring energy prices, the RBA has shifted from its accommodative policy, raising interest rates three times this year to the current 4.35%. Consumer demand has begun to cool, with household spending declining in April, housing prices stabilizing, and the unemployment rate rising slightly.