How a ‘DOUBLE’ pay rise is on its way for millions of Aussie workers next year

Low paid Australian workers could get a huge ‘double’ pay increase of more than seven per cent in 2026 – with the likes of dry cleaners and restaurant staff to be the key beneficiaries.

A major employer group has warned the potential pay spike could threaten the jobs of low-skilled workers, given it would follow the Fair Work Commission awarding a 3.5 per cent pay rise to 2.9million workers beginning on July 1 this year.

That latest increase applies to workers on awards and the 200,000 Australians on the minimum wage.

But a hidden clause in the industrial umpire’s decision proposed scrapping a key employment classification, which could come into effect in July 2026.

This would automatically grant a 3.6 per cent pay rise to the very lowest paid, regardless of the following annual wage review decision – because these workers will be moved on to a higher pay grade.

This pay rise would also be on top of what the commission decides for an upcoming minimum wage increase in 2026-27. 

If it matched this year’s 3.5 per cent increase, it would mean low paid workers are in line for a double-up pay increase of 7.1 per cent. 

Australians on low pay could get a huge seven per cent pay increase in 2026, with the likes of dry cleaners and restaurant staff among the key beneficiaries (pictured is a Sydney barista)

Employer groups have warned the series of pay rises could lead to job cuts.

But Tim Kennedy, the national secretary of the United Workers Union which represents the likes of cleaners and hospitality workers, said the minimum wage rise was about helping the lowest paid to survive.

‘When workers can’t afford rent, food or petrol, the wage floor is clearly too low,’ he told Daily Mail Australia.

‘The decision is a lifeline, but we’ll continue fighting until wages are genuinely liveable for everyone.’

Professor John Buchanan, a labour market researcher at the University of Sydney, told Daily Mail Australia the Fair Work Commission had a ‘very timid’ approaching to making wage decisions.

‘They are very keen to ensure that their decisions are not seen as irresponsible and potentially behind a jacking up or a prolonging of high interest rates,’ he said. 

‘The minimum wage and the awards system is about what kind of civilisation we are.

‘Wages policy isn’t just about economic efficiency and equations in an econometric model.

‘This is the signal we send to ourselves and our society about how we treat the most vulnerable in the labour market and by having a wages structure that ensures those at the lowest reaches can live some semblance of a decent life.’

There’s already a pay rise coming July 1 

Australia’s 200,000 minimum wage workers on the existing C13 classification will be getting $24.95 an hour from July 1, following the latest increase.

Their weekly pay is going up by $32.10 to $948, which translates into a $1,669.20 annual increase for those putting in a 38-hour week.

Those working full-time on the lowest pay will be getting $49,296 a year from next month.

There is a 3.6 per cent gap between the C13 classification, which the Fair Work Commission wants to scrap, and the better paid C12 classification, which those on the minimum wage could be transferred on to in July 2026.

Workers on the C12 classification will be getting $25.85 a hour from July 1 this year. That equates to $982.20 a week or $51,074 a year.

Minimum wage earners, now on $24.10 an hour or $915.90 a week, would effectively have enjoyed a 7.3 per cent wage increase in four weeks’ time had the C13 classification been scrapped immediately.

The Fair Work Commission’s annual wage review this week awarded a 3.5 per cent pay rise to 2.9million workers, mainly on awards, that is due to come into effect on July 1 (pictured is Prime Minister Anthony Albanese)

The Australian Industry Group’s chief executive Innes Willox said the Fair Work Commission’s proposed classification change for those on the minimum wage would threaten jobs.

‘This would impose major cost increases on many thousands of employers in the hospitality, restaurants, clubs, horticulture and pastoral industries,’ he said.

‘There is simply no justification for such a large increase in minimum wage rates for kitchen hands, glassies, farm hands, hotel cleaners and similar low-skilled jobs, on top of the annual wage review increase that would also apply. 

‘Such a move would threaten the livelihoods of many business owners and the jobs of many workers.’

But Prof Buchanan said a big wage rise for the lowest one per cent of workers, on the minimum wage, was hardly unreasonable.

‘I’ve been studying, following wages policy now, professionally, since 1985 and I can’t remember a time when any employer group ever has said, “This is a sound wages decision”,’ he said.

‘If we had been listening to them for 40 years, people would be living on poverty wages – they basically cry wolf so many times, they lose all credibility when they make that point.’

ACTU secretary Sally McManus said lower-paid Australians deserved to be valued at work.

‘We welcome the Fair Work Commission’s recognition that the real value of award wages should be restored, particularly for lower-paid Australians,’ she said. 

‘Feeling more valued at work creates the working conditions for more productive businesses and a more resilient economy.’

A change in classification would affect workers on awards covering manufacturing, hospitality, restaurants, clubs, horticulture and dry cleaning and laundry. 

Minimum wage workers received an 8.6 per cent pay increase in July 2023 when the old C14 classification was scrapped and something similar could happen in July 2026.

The latest 3.5 per cent increase was well above the 2.4 per cent headline inflation rate and above the overall 3.4 per cent increase in wages for all Australian workers in the year to March. 

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