Annual Wage Review 2025 - [2025] FWCFB 3500

[2025] FWCFB 3500

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.285—Annual wage review

Annual Wage Review 2025

(C2025/1)

JUSTICE HATCHER, PRESIDENT

VICE PRESIDENT ASBURY
DEPUTY PRESIDENT MILLHOUSE
DEPUTY PRESIDENT O’NEILL
MS LABINE-ROMAIN
PROFESSOR BAIRD

MR CULLY

SYDNEY, 3 JUNE 2025

Annual Wage Review 2025.

Contents

Section		Paragraph
1.	Overview of the decision	[1]
2.	Scope and effect of the Review	[13]
3.	National economic and business considerations	[24]
4.	Gender equality	[55]
5.	Workforce participation	[86]
6.	Relative living standards and the needs of the low paid	[91]
7.	Fair minimum wages for junior employees, trainees and employees with a disability	[116]
8.	Other considerations	[121]
9.	Consideration	[131]
10.	Conclusion	[151]
Appendix 1: List of submissions by parties
Appendix 2: Provisional list of the classifications requiring a degree qualification and awards to be the subject of review

Abbreviations and defined terms

Abbreviation / defined term	Definition
2023 Profile	Kelvin Yuen and Josh Tomlinson, A Profile of Employee Characteristics across Modern Awards (Fair Work Commission Research Report No 1/2023, March 2023)
2025 Profile	Justin Strong, David Rozenbes and Josh Tomlinson, A Profile of Employee Characteristics across Modern Awards – 2023 (Fair Work Commission Research Report No 1/2025, February 2025)
AAIS Report	Report on the Strategic Review of the Australian Apprenticeship Incentive System
ABS	Australian Bureau of Statistics
ACC Award	Aircraft Cabin Crew Award 2020 [MA000047]
ACC Award Report	Gender pay equity research: Aircraft Cabin Crew Award 2020 (Fair Work Commission Research Report No 3/2025, February 2025)
ACTU	Australian Council of Trade Unions
ARCA	Australian Restaurant and Cafe Association Ltd
ATSIHW Award	Aboriginal and Torres Strait Islander Health Workers and Practitioners and Aboriginal Community Controlled Health Services Award 2020 [MA000115]
Ai Group	The Australian Industry Group
AWOTE	Average Weekly Ordinary Time Earnings
AWR 2022 decision	Annual Wage Review 2021–22 [2022] FWCFB 3500, 315 IR 367.
AWR 2023 decision	Annual Wage Review 2022–23 [2023] FWCFB 3500, 323 IR 332
AWR 2024 decision	Annual Wage Review 2023–24 [2024] FWCFB 3500, 331 IR 248
Budget	Commonwealth of Australia Budget 2025–26
C10 Metals Framework Alignment Approach	Approach to setting award minimum wage rates described in the Stage 1 Aged Care decision: Aged Care Award 2010; Nurses Award 2020; Social, Community, Home Care and Disability Services Industry Award 2010 [2022] FWCFB 200, 319 IR 127 at [177]–[178]
C1(a) benchmark rate	The benchmark rate identified in paragraph [204] of the Stage 3 Aged Care decision, as adjusted by the AWR 2024 decision
Caring Skills benchmark rate	The benchmark rate identified in paragraphs [170] and [172] of the Stage 3 Aged Care decision, as adjusted by the AWR 2024 decision
CoE	Characteristics of Employment statistics published by the ABS
CPI	Consumer Price Index
CRA	Commonwealth Rent Assistance
CS Award	Children’s Services Award 2010 [MA000120]
EEH	Employee Earnings and Hours statistics published by the ABS
EN	Enrolled nurse
FAAA	Flight Attendants’ Association of Australia
Fast Food Award	Fast Food Industry Award 2020 [MA000003]
FW Act	Fair Work Act 2009 (Cth)
Horticulture Award	Horticulture Award 2020 [MA000028]
HPSS Award	Health Professionals and Support Services Award 2020 [MA000027]
LCI	Living Cost Index
Manufacturing Award	Manufacturing and Associated Industries and Occupations Award 2020 [MA000010]
MIHL	Minimum Income for Healthy Living
Miscellaneous Award	Miscellaneous Award 2020 [MA000104]
NMW	National minimum wage
Nurses and Midwives case	Application by the Australian Nursing and Midwifery Federation to vary the wage rates for nurses other than aged care nurses in the Nurses Award (matter AM2024/11)
Nurses Award	Nurses Award 2020 [MA000034]
Pastoral Award	Pastoral Award 2020 [MA000035]
Pharmacy Award	Pharmacy Industry Award 2020 [MA000012]
Priority Awards Review	Gender-based undervaluation – priority awards review commenced pursuant to the Expert Panel’ remarks in the AWR 2024 decision at [111]–[123] (matters AM2024/19, AM2024/20, AM2024/21, AM2024/22 and AM2024/23)
Priority Awards Review decision	Gender-based undervaluation – priority awards review [2025] FWCFB 74
Retail Award	General Retail Industry Award 2020 [MA000004]
Review	Annual wage review conducted pursuant to s 285 of the FW Act
RBA	Reserve Bank of Australia
RBA May Statement	RBA Statement on Monetary Policy (May 2025)
RN	Registered nurse
SCHADS Award	Social, Community, Home Care and Disability Services Industry Award 2010 [MA000100]
SDA	Shop, Distributive and Allied Employees Association
SJBP Act	Fair WorkLegislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth)
Stage 1 Report	Natasha Cortis et al, UNSW Social Policy Research Centre, Gender-based Occupational Segregation: A National Data Profile (Final Report, 6 November 2023)
Stage 2 Report	Fair Work Commission, Stage 2 Report — Gender Pay Equity Research — Annual Wage Review 2023–24 (Report, 4 April 2024)
Stage 3 Aged Care decision	Aged Care Award 2010; Nurses Award 2020; Social, Community, Home Care and Disability Services Industry Award 2010 [2024] FWCFB 150, 331 IR 137
UWU	United Workers’ Union
WPI	Wage Price Index

The Annual Wage Review Decision 2025

Overview of the decision

Introduction

The Fair Work Act 2009 (Cth) (FW Act) requires the Fair Work Commission to conduct an annual wage review (Review).[1] There are two main functions in the Review. The first is to review the current national minimum wage (NMW) order and to make a new NMW order.[2] The second is to review the minimum wage rates prescribed by modern awards and to consider whether they should be adjusted.[3]

The NMW applies only to persons in the national industrial relations system who are not covered by a modern award or an enterprise agreement. Its practical effect is limited since only a very small proportion of the workforce is actually paid in accordance with the NMW.[4]

Modern awards have wider practical application. Approximately 20.7 per cent of all employees in Australia are paid at the applicable minimum wage rates in the 121 modern industry and occupational awards currently in operation.[5] Accordingly, such employees, and their employers, are those principally affected in a direct way by this decision. The modern award‑reliant workforce has characteristics that are markedly different from the workforce as a whole: it is disproportionately female, more than two‑thirds of such employees work part-time hours, more than half are casual employees, and more than a third are low-paid.[6] Because of the part-time and low-paid characteristics of the modern award‑reliant workforce, the wages paid to them constitute only about 10.5 per cent of the national ‘wage bill’.[7] This means that the direct effect of the Review on wages growth across the whole economy is limited. This modern award‑reliant workforce is not spread evenly across the economy but is concentrated in certain sectors of the economy, meaning that the Review has more marked effects in these sectors. Four industry sectors with the highest numbers of modern award‑reliant employees, namely Accommodation and food services, Health care and social assistance, Retail trade and Administrative and support services, account for over two-thirds of all modern award‑reliant employees. In other sectors such as Mining, and Finance and insurance services, the proportion of modern award‑reliant employees is negligible.[8]

The Review is required to be conducted in accordance with the statutory framework of the FW Act.[9] The minimum wages objective in s 284(1) of the FW Act requires the Commission to establish and maintain a safety net of fair minimum wages taking into account a number of identified matters including the performance and competitiveness of the national economy, the need to achieve gender equality, promoting social inclusion through increased workforce participation, and relative living standards and the needs of the low paid. The modern awards objective in s 134(1) of the FW Act also requires that a number of identified considerations be taken into account. In discharging its functions under the statutory scheme, the Commission must make an evaluative judgment based on a complex balancing of the prescribed and other relevant considerations.

A wide range of parties, including employer and union organisations and federal and State governments, have made written submissions in the Review. In addition, oral submissions were received at a hearing conducted on 21 May 2025 in Sydney.[10] A number of parties’ submissions contain specific proposals as to the quantum of the wage adjustments we should order in this Review. All the submissions, including these proposals, have been taken into consideration. However, as has been emphasised in previous decisions, the annual wage review process is not one of adjudication between competing proposals.[11] Rather, we are required by the FW Act to make our own assessment as to what constitutes a safety net of fair minimum wages having regard to the considerations which are prescribed by the statute or which are otherwise relevant.

The decision

We have decided to increase the NMW and all modern award minimum wage rates by 3.5 per cent, effective from 1 July 2025. The principal consideration which has guided our decision is the fact that, since July 2021, the real value of modern award wages (at the benchmark C10 rate) has declined by 4.5 percentage points relative to inflation as measured by the Consumer Price Index (CPI). The loss in the real value of the NMW has been less than this, at 0.8 percentage points, as a result of a higher increase awarded to the NMW in the Annual Wage Review 2022–23 decision[12] (AWR 2023 decision). This reduction in real modern award wages and the NMW has been the result of the spike in inflation which commenced in 2021 and peaked in late 2022. The continuation of this inflationary episode has meant that, over the last three annual wage review decisions, the Commission has repeatedly deferred taking any action to reverse this ongoing decline in real wages out of a concern that this might result in the further persistence of higher inflation. The result has been that living standards for employees dependent on modern award wages have been squeezed and the low paid have experienced greater difficulty in meeting their everyday needs.

The Reserve Bank of Australia’s (RBA) assessment that inflation has sustainably returned to its target range of 2–3 per cent indicates that this inflationary episode is now over. That provides us with an opportunity to go at least some of the way towards correcting what has happened over the last four years by awarding a real increase to modern award wages and the NMW. We are concerned that if this opportunity is not taken in this Review, the loss in the real value of wages which has occurred will become permanently embedded in the modern award system and the NMW and a reduction in living standards for the lowest paid in the community will thereby be entrenched.

We are satisfied that the level of wage increase we have determined is sustainable. The labour market remains strong overall, with continuing employment growth, low unemployment and historically high rates of participation in the workforce. Reductions in interest rates are likely to lead to higher consumer demand and a higher level of economic growth than we have experienced in recent years. Although business has faced challenging circumstances in recent times, business conditions have remained reasonably healthy, with the level of non-mining profits maintained in real terms and profit margins at approximately their pre-pandemic level.

Australia’s continuing poor performance in labour productivity growth has operated as a restraining factor on the size of the increase we have determined. However, that problem is primarily located in the non-market sector, where there has been significant growth in employment in the healthcare and social services sectors in recent years. In the market sector, there has been modest growth in labour productivity over the current multi-year cycle, which indicates some capacity for business to pay for a modest increase in real minimum wages. Certainly, the productivity problem will not be resolved by the indefinite continuation of the reduction in real wages which has occurred over the last four years. We have also taken into account, as moderating factors in our determination, the upcoming increase in the Superannuation Guarantee contribution rate, the less favourable economic outlook arising from uncertainty caused by changing US trade policies, and some indications of weakness in the Accommodation and food services sector in which a significant proportion of modern award-reliant workers are employed.

We intend to push forward with our targeted program to review particular award classifications in order to meet the statutory imperative to eliminate gender-based undervaluation of work in modern awards and ensure that female workers receive equal remuneration for work of equal or comparable value. Arising from last year’s annual wage review decision, the Commission reviewed a number of priority awards and issued a major decision[13] on 16 April of this year (Priority Awards Review decision) establishing principles for the identification and elimination of gender-based undervaluation. The next priority will be to review all professional classifications in modern awards — that is, all classifications for which a university degree is required as a minimum — that have not yet been the subject of review in accordance with the principles that have been established. The Commission will shortly commence proceedings on its own initiative for this purpose.

Structure of this decision

The reasons for our decision are set out below. The reasons are structured in the following way. Section 2 of the decision contains our updated observations about the size and characteristics of the segment of the workforce directly affected by the Review and the practical effect of the Review upon the labour market. In sections 3–7, we deal with each of the mandatory considerations in the minimum wages objective in s 284(1) of the FW Act, and also with those considerations in the modern awards objective in s 134(1) with which they overlap, as follows:

3.National economic and business considerations: ss 284(1)(a), 134(1)(f) and (h).
4.Gender equality: ss 284(1)(aa), 134(1)(ab).
5.Workforce participation: ss 284(1)(b), 134(1)(c).
6.Relative living standards and the needs of the low paid: ss 284(1)(c), 134(1)(a).
7.Fair minimum wages for junior employees, trainees and employees with a disability: s 284(1)(e).

In section 8, we deal with the remaining mandatory considerations in s 134(1), including access to secure work (s 134(1)(aa)) and the encouragement of collective bargaining (s 134(1)(b)). In section 9, we set out how we have weighed the mandatory considerations and other relevant matters to reach the outcome we have determined. In section 10, we set out our conclusion as to the orders and determinations to be made.

Scope and effect of the Review

To effectively discharge our statutory functions in the Review, it is necessary to have an accurate understanding of the size and characteristics of that segment of the workforce which is affected by Review decisions. The most directly affected employees are those whose actual rate of pay is set by the NMW (NMW-reliant employees) or by a modern award (modern award‑reliant employees).

In relation to NMW-reliant employees, the Annual Wage Review 2023–24 decision[14] (AWR 2024 decision) analysed data concerning the proportion of the workforce which fell into this category with the assistance of a report prepared by the Commission’s research staff. The report examined the characteristics of NMW-reliant employees based on microdata obtained from the May 2021 Employee Earnings and Hours (EEH) survey.[15] Based on information provided in that report, the conclusion reached was that the number of NMW-reliant employees was much lower than the Australian Government’s estimate (based on 2023 EEH data) of 32,100 (representing about 0.25 per cent of the entire employee workforce) and was ‘likely to be very small’.[16] The Expert Panel in the AWR 2024 decision observed that ‘the NMW has very limited practical effect in the Australian industrial relations landscape notwithstanding its role in the statutory annual wage review scheme’.[17]

The AWR 2024 decision invited parties to present any evidence or other material ‘which might advance our understanding of the practical scope of the application of the NMW’[18] in this year’s Review. The Australian Council of Trade Unions’ (ACTU) submission advances an analysis which seeks to quantify the number and proportion of all employees who are paid at or below the rate of the NMW. However, this analysis encompassed adult employees whose ordinary time earnings are at or below a rate equal to that of the NMW, and included employees whose pay is set by awards, collective agreements or individual arrangements. That analysis answers a different question, albeit one that is relevant to the needs of the low paid, and we consider it later in this decision in that context. The ACTU agrees that the number of employees whose pay is directly set by the NMW order ‘is likely to be very low’. No other party advanced any material shedding any new light on the practical scope of the application of the NMW or sought to challenge the analysis in the AWR 2024 decision, noting that some submissions used inexact terminology in failing to distinguish between the NMW and modern award wage rates of an equal amount. We shall therefore proceed on the basis of the conclusions stated in the AWR 2024 decision, namely that the number of NMW-reliant employees is very small and that the NMW has very limited practical effect.

As to modern award‑reliant employees, the Commission published a report in February 2025[19] profiling the characteristics of such employees based upon an analysis of microdata obtained from the May 2023 EEH survey (2025 Profile).[20] This report updates a previous report published in 2023 (2023 Profile), which was based on the May 2021 EEH survey and was referred to extensively in the AWR 2023 decision.[21] The 2025 Profile shows that 20.7 per cent of all employees were modern award‑reliant, up slightly from 20.5 per cent in the 2023 Profile. The number of modern award‑reliant employees is about 2.61 million. A number of key characteristics of modern award‑reliant employees, comparing the 2023 and 2021 EEH data, are set out in the following table.

Table 1: Characteristics of modern award-reliant employees — 2021 and 2023

2021			2023
Modern award‑reliant employees	Employees not modern award‑reliant	All employees	Modern award‑reliant employees	Employees not modern award‑reliant	All employees
Full-time hours (%)	34.8	66.2	59.8	30.4	66.3	58.8
Part-time hours (%)	65.2	33.8	40.2	69.6	33.7	41.2
Casual (%)	49.7	14.5	21.1	52.8	14.6	22.9
Permanent/fixed term (%)	50.3	85.5	78.9	47.2	85.4	77.1
Average age (years)	34.8	41.5	40.1	33.9	41.5	39.9
Junior rates of pay (%)	10.5	2.1	3.8	12.5	2.0	4.2
Employed by small business (1–19 employees) (%)	35.6	23.2	25.7	33.6	22.7	25.0
Female (%)	58.1	48.5	50.4	58.6	49.5	51.4
Low paid (%)	36.1	6.8	12.1	35.6	6.0	11.3

Source: AWR 2023 decision [2023] FWCFB 3500, 323 IR 332 [53]; Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Table 7.6; 2025 Profile; Australian Bureau of Statistics (ABS), Microdata: Employee Earnings and Hours, Australia, May 2023; ABS, Employee Earnings and Hours, Australia, May 2023.

The characteristics of the modern award‑reliant workforce which we consider most relevant to our consideration in this Review which may be identified from the data are as follows:

(1)It is predominantly made up of employees working part-time hours (less than 35 hours per week), with the proportion of such employees having notably increased from 65.2 per cent to 69.6 per cent from 2021 to 2023. This represents a continuation, and perhaps an acceleration, of a trend over the last decade of an increasing proportion of award‑reliant employees working part-time hours.[22] The average number of total paid hours per week for the modern award‑reliant workforce is 24.5.[23]

(2)A majority of modern award‑reliant employees is now casual (52.8 per cent), up from 49.7 per cent in 2021. Half of all casual employees are modern award‑reliant.

(3)It is predominantly female (58.6 per cent), and significantly more female than the workforce as a whole (51.4 per cent). Almost a quarter of female employees are modern award‑reliant (23.6 per cent).[24]

(4)The modern award‑reliant workforce is, on average, younger than the workforce as a whole (33.9 years compared to 39.9). An important aspect of this is that 37.3 per cent of modern award‑reliant employees are 24 years of age or younger, and close to half (46.5 per cent) of all employees in this age group are modern award‑reliant.[25] Relatedly, 12.5 per cent of modern award‑reliant employees are paid junior rates of pay. They constitute 61.5 per cent of all employees who are paid junior rates.

(5)Modern award-reliant employees are more likely to be employed in a small business (33.6 per cent) than the workforce as a whole (25.0 per cent).

(6)Over one third (35.6 per cent) of modern award‑reliant employees are low-paid,[26] and 56.9 per cent of all low-paid employees are modern award‑reliant.

Just over two-thirds of modern award‑reliant employees (67.1 per cent) are paid the minimum wage rates prescribed in 10 modern awards.[27] Data concerning the characteristics of modern award‑reliant employees paid in accordance with those 10 awards is set out in the following table.

Table 2: 10 modern awards applying to the most modern award-reliant employees and their related characteristics

Modern award	Share of modern award‑reliant employees (%)	Part-time employees (%)	Average weekly paid hours	Casual employees (%)	Female employees (%)	Low-paid employees (%)
General Retail Industry Award 2020	13.5	78.5	21.0	61.4	67.6	34.5
Social, Community, Home Care and Disability Services Industry Award 2010	11.0	76.8	25.2	51.9	68.4	4.0
Hospitality Industry (General) Award 2020	8.9	82.0	20.6	72.3	61.1	47.3
Fast Food Industry Award 2020	8.1	93.0	16.4	66.6	65.1	23.6
Restaurant Industry Award 2020	6.4	83.3	19.2	74.2	59.9	43.0
Children’s Services Award 2010	4.8	76.8	25.3	29.9	93.8	28.5
Health Professionals and Support Services Award 2020	4.0	79.7	22.3	38.9	86.6	26.7
Building and Construction General On-site Award 2020	3.5	27.4	36.7	33.6	9.2	5.2
Cleaning Services Award 2020	3.4	82.5	21.9	47.2	52.0	35.2
Clerks—Private Sector Award 2020	3.3	59.5	26.7	34.9	81.2	23.8

The remaining 32.9 per cent of modern award‑reliant employees are covered by the other 111 modern awards in force.

The concentration of modern award‑reliant employees in the coverage of a small number of modern awards is reflected in the data on modern award reliance by industry division and selected subdivisions. The following table shows that four industry divisions account for over two-thirds (67.7 per cent) of all modern award‑reliant employees.

Table 3: Modern award reliance by industry division and selected subdivisions

Industry division Subdivision	Industry share of modern award employees (%)	Modern award reliance within industry (%)
Accommodation and food services Food and beverage services	21.7 19.4	59.5 60.0
Retail trade Other store‑based retailing Food retailing	16.8 9.4 5.6	33.9 37.4 30.7
Health care and social assistance Social assistance services	18.3 12.1	23.7 54.5
Administrative and support services Administrative services	10.9 7.4	38.1 33.1
Manufacturing	5.1	17.1
Construction	4.9	13.8
Other services	4.4	26.1
Professional, scientific and technical services	3.4	8.1
Education and training	2.9	6.4
Transport, postal and warehousing	2.4	12.8
Wholesale trade	2.4	12.6
Arts and recreation services	2.2	28.8
Rental, hiring and real estate services	1.6	16.9
Public administration and safety	1.5	5.0
Information, media and telecommunications	0.6	8.7
Finance and insurance services	0.5	2.6
Mining	0.2	2.4
Electricity, gas, water and waste services	0.2	4.6

Source: 2025 Profile 73, Table A.

The proportion of the national ‘wage bill’ for modern award‑reliant employees is considerably smaller, at 10.5 per cent, than their share of the total employee workforce.[28] This reflects the fact that, on average, modern award‑reliant employees work less hours and are lower paid than the employee workforce as a whole.

Table 4: Award-dependent wages in the total economy, modern award‑reliant employees, 2023

Number	Share total (%)
Workers reliant on modern award wages (millions, 2023)	2.61	20.7
Average weekly wage ($), modern award‑reliant employees	751.6	50.4
Wage bill of modern award‑reliant employees ($billion per year, 2023)	102.1	10.5

Note: Data for 2023 is the most recent available data for modern award-reliant employees.

Source: Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Table 7.5.

The relatively small contribution to the national ‘wage bill’ made by the wages of modern award‑reliant employees means that the effect of Review decisions on annual Wage Price Index (WPI) outcomes is limited. In the AWR 2024 decision, the Expert Panel estimated that the 3.75 per cent increase which it awarded would contribute approximately 0.4 of a percentage point to the WPI for the 12 months to March 2025.^{^[29]} The actual contribution to the WPI for the 12 months to March 2025, which is reflected in the award component for the September quarter 2024, was slightly less than this at 0.36 of a percentage point.[30] This represents 10.8 per cent of the total increase (original) to the WPI over the 12 months to March 2025.

Table 5: Contributions to the WPI, by method of wage setting

Quarter	Enterprise agreement (%)	Individual arrangement (%)	Award (%)	Total increase (original) (%)	Total increase (seasonally adjusted) (%)
June 2024	0.23	0.32	0.01	0.6	0.9
September 2024	0.46	0.59	0.36	1.4	0.9
December 2024	0.26	0.33	0.02	0.6	0.7
March 2025	0.41	0.28	0.07	0.8	0.9
Sum over year	1.36	1.52	0.46	3.3	3.4

Source: Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Table 5.3; ABS, Wage Price Index, Australia, March 2025.

As was explained in the AWR 2023 decision,[31] the outcomes of Review decisions also have indirect effects, including via enterprise agreements which prescribe wage increases in line with Review decisions. As at the December quarter 2024, almost 300,000 employees constituting about 2.3 per cent of the employee workforce were covered by in-term enterprise agreements of this nature.[32] This number increased significantly in 2024 due to the approval of new agreements for the Coles[33] and Woolworths[34] retail businesses, which are linked to Review outcomes and between them apply to over 200,000 employees. Review outcomes are ‘flowed-on’ to some State awards by State industrial tribunals, but the number of employees covered by such awards is small. Review outcomes can also influence the wages for non-award‑reliant employees by affecting wage expectations, especially if the outcome is above (or below) what was expected. This ‘spillover’ or ‘signalling’ effect is not directly observable. The RBA assumes, on the basis of an analysis of WPI microdata, that Review outcomes will spill over to around 10 per cent of individual arrangements and 15 per cent of enterprise agreements, but acknowledges that these estimates are sensitive to assumptions.[35]

National economic and business considerations

Sections 284(1)(a) and 134(1)(f) and (h) express the economic considerations to be taken into account in different ways. Section 284(1)(a) expresses the overriding consideration to be the ‘performance and competitiveness of the national economy’, with ‘productivity, business competitiveness and viability, inflation and employment growth’ being a non-exhaustive list of elements of this consideration. Sections 134(1)(f) and (h) are concerned with ‘the likely impact of any exercise of modern award powers’ on the identified economic and business considerations. ‘Modern award powers’ include the variation of modern award minimum wage rates as part of the Review process: s 134(2)(b). In the context of this Review therefore, ss 134(1)(f) and (h) require us to engage in consideration of a predictive or speculative nature of the effects which might reasonably be expected to follow if a given outcome were determined. Section 134(1)(f) is concerned with the potential impact on ‘business’, with the productivity, employment costs and the regulatory burden of business being elements of this consideration. ‘Business’ connotes enterprises engaged in commercial or trading activity and is not apt to describe governmental functions. Section 134(1)(h) is concerned with the potential impact on ‘employment growth, inflation and the sustainability, performance and competitiveness of the national economy’. Unlike s 134(1)(f), the provision focuses on the aggregate, as opposed to sectoral, impact of an exercise of modern award powers.[36]

We structure our consideration of ss 284(1) and 134(1)(f) and (h) in the following way. First, we will outline the current and expected future performance and competitiveness of the national economy, with a focus on the specific matters identified in s 284(1)(a) and s 134(1)(h). Second, we will consider how, if at all, the outcome of this Review might affect national economic performance. Third, we will consider the likely impact of the Review on business. Because, as earlier discussed, the modern award-reliant workforce is substantially concentrated in a few industry sectors, our consideration of the potential effects on business will necessarily have a primary focus on those sectors.

The performance and competitiveness of the national economy

The key indicators of current national economic performance are set out in the following table.

Table 6: Key indicators of national economic performance

Indicator	Measure	Latest	Previous year	5-year average
Indicator	Measure	December quarter 2024	December quarter 2023	December quarter 2024
Gross domestic product (GDP)	Annual % change	1.3	1.5	2.1
GDP per capita	Annual % change	-0.7	-0.9	0.6
Real net national disposable income (RNNDI)	Annual % change	0.0	1.1	2.5
RNNDI per capita	Annual % change	-2.0	-1.3	1.0
Hours worked (Labour Account)	Annual % change	2.5	1.5	2.2
Real unit labour costs	Annual % change	2.3	3.6	0.0
Household consumption	Annual % change	0.7	0.9	1.8
Labour productivity	Annual % change	-1.2	0.0	-0.1
Labour productivity — market sector	Annual % change	-0.4	1.7	0.5
Labour productivity — non-mining market sector	Annual % change	0.3	2.4	1.5
Non-mining business investment	Annual % change	1.8	9.2	4.8
Profits	Annual % change	-6.2	-5.8	6.0
Non-mining profits	Annual % change	3.3	3.9	6.4
Average weekly ordinary-time earnings (AWOTE)	Annual % change	4.6	4.5	3.6
Real household disposable income	Annual % change	1.8	0.4	1.5
March quarter 2025	March quarter 2024	March quarter 2025
CPI	Annual % change	2.4	3.6	3.8
Trimmed mean	Annual % change	2.9	4.0	3.7
Employee Living Cost Index (LCI)	Annual % change	3.4	6.5	4.6
WPI	Annual % change	3.4	4.0	3.0
April 2025	April 2024	April 2025
Employment	Annual % change	2.7	2.4	3.5
Unemployment	%	4.1	4.1	4.5

Source: Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Overview Table; ABS, Australian National Accounts: National Income, Expenditure and Product, December 2024; ABS, Average Weekly Earnings, Australia, November 2024; ABS, Business Indicators, Australia, December 2024; ABS, Consumer Price Index, Australia, March 2025; ABS, Labour Force, Australia, March 2025; ABS, Selected Living Cost Indexes, Australia, March 2025; ABS, Wage Price Index, Australia, March 2025; ABS, Wage Price Index, Australia, March 2025.

The latest economic forecasts in the RBA’s May 2025 Statement on Monetary Policy[37] (RBA May Statement) and the Commonwealth Budget 2025–26 (Budget) for economic growth, inflation, employment, productivity, wages and investment are set out in the following table.

Table 7: RBA and Budget forecasts, growth rates (%)

June 2025	Dec 2025	June 2026	Dec 2026	June 2027
Gross domestic product	RBA	1.8	2.1	2.2	2.2	2.2
Gross domestic product	Budget	1½	2¼	2½
Household consumption	RBA	1.4	1.9	2.2	2.6	2.4
Household consumption	Budget	¾	2¼	2¼
CPI	RBA	2.1	3.0	3.1	2.9	2.6
CPI	Budget	2½	3	2½
Trimmed mean	RBA	2.6	2.6	2.6	2.6	2.6
Employment growth	RBA	2.1	1.4	1.3	1.4	1.4
Employment growth	Budget	2¾	1	1¼
Unemployment	RBA	4.2	4.3	4.3	4.3	4.3
Unemployment	Budget	4¼	4¼	4¼
WPI	RBA	3.3	3.3	3.1	3.0	3.0
WPI	Budget	3	3¼	3¼
Labour productivity	RBA	-0.6	0.9	1.1	1.0	1.0
Real household disposable income	RBA	3.3	2.6	2.0	2.0	2.4

Source: Commonwealth of Australia, Budget 2025–26: Budget Strategy and Outlook (Budget Paper No 1, 25 March 2025) 43; RBA May Statement Table 4.2.

The overall picture which emerges from the data and forecasts above is mixed. In the previous three annual wage review decisions, there was a necessary focus on the elevated rate of inflation and the RBA’s tightening of monetary policy in response. However, since the AWR 2024 decision, the rate of inflation has moderated to the point where this has become a matter of significantly less concern. The ‘headline’ CPI rate has fallen within the RBA’s inflation target range of 2–3 per cent, aided by Budget measures in place during 2024–25 including energy rebates and increases to Commonwealth Rent Assistance (CRA) (which we discuss further below). The CPI is projected to rise slightly over 2025–26 because of the winding back of the Australian Government’s energy rebates, which will expire at the end of 2025. The RBA’s preferred measure of underlying inflation, the trimmed mean, has also fallen within the RBA’s target range and is projected to stay there. The RBA’s assessment is that the slowdown in underlying inflation has been broadly‑based and that inflation is expected to settle at ‘a low and stable rate’ around the middle of the RBA’s target range.[38]

The trajectory of tightening monetary policy, with 13 consecutive increases to the official cash rate from May 2022 through to November 2023, has now been reversed with the RBA cutting interest rates in February and May 2025. This is partially reflected in the employee LCI, which takes into account mortgage interest costs. For the 12 months to the March quarter 2025, this has fallen to 3.4 per cent, reflecting in part the February 2025 reduction in interest rates. This is to be compared to 6.5 per cent for the preceding year and 9.6 per cent for the year before that. It is to be expected that the LCI rate will fall further in the coming year as a result of the May 2025 interest rate reduction and possible future interest rate reductions.

Substantially as a result of the past three years of tightened monetary policy, economic growth in the 12 months to the December quarter 2024 has been weak, and somewhat lower than projected at the time of the AWR 2024 decision. The economy can at least be said to have achieved a ‘soft landing’ in that the moderation to inflation achieved by increased interest rates has not resulted in a recession in the officially-defined sense (two consecutive quarters of negative GDP growth), although there has been an extended ‘per capita recession’ with GDP per capita falling for seven successive quarters from March 2023 to September 2024. The RBA May Statement’s assessment of the current position is that a modest recovery in domestic demand is underway, with public demand accounting for about half of the growth rate. Household consumption, supported by an increase in real incomes, was somewhat stronger in the December quarter 2024, but this may have moderated in the March quarter 2025.[39]

Somewhat paradoxically, the labour market has remained strong, with solid employment growth and a level of unemployment which has barely changed since the time of the AWR 2024 decision and may be characterised as constituting ‘full employment’. However, the aggregate figures mask some indications of weakness in the market sector. Around 80 per cent of employment growth in 2024 was in the non-market sector (direct public sector employment plus private businesses providing public services), which grew by 8.2 per cent while growth in employment in the market sector was just 0.9 per cent. This implies that government spending has been supporting the labour market and that, absent that support, unemployment would be higher. The RBA May Statement characterises market sector employment growth over the last year as ‘soft’, but overall assesses the labour market as remaining relatively tight with indicators of spare capacity stabilising at somewhat elevated levels.[40] Wages growth has moderated broadly in line with the RBA’s expectations.

The combination of weak economic growth and strong overall employment and hours growth has meant a reduction in labour productivity in 2024, contrary to the RBA forecast and Budget expectations at the time of the AWR 2024 decision.[41] In previous annual wage review decisions, it has been emphasised that productivity is best assessed over multi-year cycles, typically a period of four to eight years. The current cycle (starting 2021–22) is incomplete but, considered together with the previous cycle (2017–18 to 2021–22), it is clear that labour productivity growth is considerably below its long-run trend, with the level of productivity being no higher than it was pre-pandemic.

However, as with employment growth, it is necessary to differentiate between productivity growth in the market and non-market sectors. It is also necessary to separate out the mining sector, for which measured productivity is not always an accurate representation of productive efficiency because resources that are easier to mine are depleted first, with higher commodity prices leading mining companies to pursue harder-to-mine resources.[42] Annualised productivity growth (gross value added (GVA) per hour worked) in the non-mining market sector from the December quarter 2019 to the December quarter 2024 was a reasonably healthy 1.5 per cent. This is reduced to 0.5 per cent in the market sector once mining is included, and across the whole economy, including the non-market sector, GDP per hour worked was -0.1 per cent annualised, or -0.7 per cent over the whole period.

Therefore, leaving aside the mining sector, it appears that the national economy’s ‘productivity problem’ is largely a consequence of the non-market sector’s disproportionate growth in its share of GVA and hours worked. This flows from governmental policy decisions to improve the availability and quality of services in areas such as healthcare and social services. The measurement of productivity in the non-market sector is problematic since it is not possible to measure output by reference to the market prices paid for goods and services, as in the market sector. The Australian Bureau of Statistics (ABS) generally uses production costs as a proxy for output prices, meaning that when rapid employment growth occurs in the non-market sector, particularly in lower-paid employment, this has the consequence of increasing measured output by less than the increase in hours worked, thus lowering measured productivity. This is not a measure that operates by reference to the improved quality of outcomes that might be achieved by greater investment in the non-market sector, and it likely underestimates ‘true’ productivity improvements in the sector. For example, a 2024 Productivity Commission analysis of health sector outcomes in the treatment of cancers, cardiovascular diseases, blood and metabolic disorders, endocrine disorders and kidney and urinary diseases measured ‘quality adjusted multifactor productivity’ as having increased by about 3 per cent per year between 2011–12 and 2017–18.[43]

More generally, there may be other post-pandemic abnormalities operating to depress productivity growth. The recent rapid expansion in employment may have seen persons who have been long-term unemployed or are new immigrants, and/or who have below-average skills, education and experience enter employment and be less productive in their jobs, at least initially. In addition, the normally‑stable ratio of capital inputs to labour inputs has fallen as business investment has not kept pace with the rapid growth in employment, growing by 1.8 per cent during 2024 compared with a 3.1 per cent increase in employment in the same period. The RBA May Statement describes the necessary recovery in the capital-to-labour ratio as having stalled in recent quarters. Notwithstanding this, the RBA has forecast growth in (non-farm) labour productivity of 1.1 per cent for the upcoming financial year, and the Budget also assumes a return to productivity growth. These are based on forecasts of output growth outpacing lower employment and hours growth. We note that forecasts of an easing labour market in recent years have repeatedly proven to be misplaced, with the latest labour force data again showing surprising strength in employment growth.

Of concern in respect of business competitiveness may be that real unit labour costs increased by 2.3 per cent in the 12 months to the December quarter 2024. However, this includes the non-market sector in which measured productivity has fallen, as earlier discussed. From a longer-term perspective, real unit labour costs have not increased compared to five years ago, and are lower than what they were a decade ago.[44]

After a precipitous drop in household living standards due to inflation outpacing wages and mortgage interest rate increases in 2022 and 2023, there has been some recovery in real household disposable income in 2024 both as a result of wages beginning to run ahead of inflation, and because of the Stage 3 income tax cuts. AWOTE increased by 4.6 per cent in 2024, well ahead of both the CPI and the WPI. Real household disposable income is expected to continue to increase over the course of 2025 and beyond as a result of further increases in real wages and reductions in mortgage interest rates.[45]

Lower interest rates are likely to support improved economic conditions over the next year, with higher economic growth and household consumption. The Budget forecasts that real household disposable income for 2026–27 will be around 8.75 per cent higher than in 2023–24.[46] However, the assessment in the RBA May Statement is that growth will be somewhat weaker than previously expected as a result of uncertainty arising from international trade tensions, although the RBA considers there is little sign that this has yet affected consumer or business sentiment.[47] The International Monetary Fund cut its growth projections for global growth and for most countries, including Australia, in its April 2025 World Economic Outlook Report as a result of a more pessimistic assessment of the effects of US trade policies. While the degree of uncertainty is yet to manifest in any discernible change in economic conditions, the economic forecasts in the Budget and by the RBA have a higher margin of error than normal.

Likely impact of the exercise of modern award powers on the national economy

The proposals advanced by parties participating in this Review concerning what level of increase to the NMW and modern award minimum wage rates should be awarded range (with one exception) from 2 per cent at the bottom end to 4.5 per cent at the top end. Our task is not, as earlier stated, to adjudicate which proposal should succeed, nor are we bound by the ambit of the proposals advanced. Nonetheless, the ambit of parties’ proposals serves as an acceptable proxy for the range of outcomes which might reasonably flow from this Review for the purpose of our consideration of the likely impact of the exercise of modern award powers on the national economy.

Table 5 above shows that the increase of 3.75 per cent to the NMW and modern award minimum wages in last year’s Review contributed only 0.36 percentage points to, or 10.8 per cent of, a total WPI of 3.3 per cent (original) over the year ending March 2025. This is a consequence of the size and characteristics of the modern award-reliant workforce as we have earlier described them. The RBA and Budget WPI forecasts for 2025–26 are for growth to remain broadly the same (3.1 and 3.25 per cent respectively). It is not known to us what assumption about the outcome of this year’s Review was used to arrive at these forecasts although, presumably, it was within the range of the ambit identified above. An outcome within the identified range would contribute around 0.20–0.45 percentage points to the WPI in 2025–26. Even taking into account that the Review outcome may have broader ‘spillover’ or ‘signalling’ effects, it is difficult to see therefore that a Review outcome within the range could make any difference of significance to inflation (by reason of an effect on wages growth).

For similar reasons, detrimental effects on national economic and business competitiveness are unlikely. Nor, in the context of a labour market which remains strong overall, is it likely that there would be any aggregate disemployment effects. The last three annual wage reviews have seen nominal increases in the NMW and modern award minimum wage rates that have, because of the rate of inflation, been significantly higher than for the preceding decade, but there has not been any discernible adverse consequence for employment growth or the rate of unemployment. Some positive national economic effect is likely, in that modern award minimum wage rate increases will support household consumption and consumer sentiment.

No causal relationship is identifiable between the outcome of this Review and the future productivity performance of the national economy. While large minimum wage increases may result in improved productivity by incentivising employers to substitute capital for labour, it is doubtful that any increase of the order we have discussed would be sufficient to have that effect.

Likely impact of the exercise of modern award powers on business

In broad overview, business conditions are moderately healthy despite the challenging circumstances that business has faced due to the cumulative effect of high interest rates in suppressing consumption. Non-mining business profits increased by a nominal 3.3 per cent in the 12 months to the December quarter 2024, which was a lower rate of growth than in recent years but still amounts to some growth in real terms. The RBA May Statement assesses that profit margins for most businesses have remained around pre-pandemic levels.[48] Business entries exceeded exits in 2023–24, with a 2.9 per cent increase in the number of employing businesses over that period.[49] The ABS’ quarterly experimental counts of businesses showed a further net increase in business numbers of 1.2 per cent over the three quarters since the end of that period.[50]

The total number of insolvencies for 2024–25 will likely be higher than for 2023–24 or for any of the four years preceding this.[51] In its April 2025 Financial Stability Review[52] (April FSR), the RBA said that the number of insolvencies is at the top of the range observed in the 2010s but, on a cumulative basis over the last few years, remains below the pre-pandemic trend. The RBA attributes this recent rise to challenging trading conditions, and also to a catch-up effect from the exceptionally low level of insolvencies during the pandemic as a result of temporary government measures, since withdrawn, to support business cash flows and employment. The April FSR also points to the introduction of reforms to the insolvency framework to facilitate small business restructuring which were introduced in 2021 as having slightly affected aggregate insolvencies. The April FSR discloses that about 20 per cent of insolvencies are small business restructures, of which more than 90 per cent re-register and resume trade within three months.

Surveys of business are, as usual, mixed. The National Australia Bank (NAB) Quarterly Business Survey for the March quarter 2025, published in April 2025,[53] shows an increase in business confidence compared to the December and September quarters 2024, with a particular lift in confidence in the Retail sector, but overall remains in negative territory. Business conditions are assessed as having ‘eased’, with the largest drop being in the profitability subcomponent, and are now below average but remain at positive levels. Expectations for business conditions in three months and 12 months remain positive, but there has been a fall in expectations for trading, profitability, employment, forward orders and capital expenditure. Although wages costs remains the top issue affecting business confidence, the proportion of businesses reporting this or the availability of labour as an issue has declined, and pressures on margins and demand have been reported as an issue by a higher proportion of businesses. The rate of labour cost growth over the quarter (0.9 per cent) was lower than the preceding quarter (1.0 per cent) and for 12 months ago (1.2 per cent).[54] Purchase costs grew from 0.8 per cent in the previous quarter to 0.9 per cent, but are lower than 12 months ago (1.1 per cent). The NAB also published its Monthly Business Survey for April 2025 in May 2025.[55] This survey, which was undertaken after the US ‘Liberation Day’ tariff announcement, showed some further improvement in business confidence, albeit remaining in negative territory, and a further slight ‘easing’ in business conditions driven by weaker profitability.

The ACCI–Westpac Survey of Industrial Trends conducted from 12 February to 4 March 2025,[56] which is focused on manufacturing, shows an improvement in business conditions, with increases in new orders and output, compared to December 2024. Expectations as to the general business outlook remain cautiously optimistic but are tempered by trepidation concerning tariffs and international trade, and concerns about cost pressures and the capacity to recruit skilled labour:

On balance, the fiscal boost, an improving inflation situation, and lower interest rates, should support firmer demand over the coming year. Still, the recovery in demand is likely to be relatively modest and uneven and risks remain. Notably, trade tensions and policy uncertainty have risen. The direct effect on Australia from US trade tariff hikes, announced thus far, is expected to be limited, given the minor share of exports to the US and the ability for the majority of these to be redirected. Nonetheless, manufacturers could still be impacted indirectly if trade tensions lead to a sharp slowdown in global growth and/or a weaker Australian dollar and higher import prices.
. . .
The manufacturing sector also continues to face several headwinds from high, albeit easing, cost pressures and evidence of a somewhat worsening in labour shortages. A net 26% of respondents indicated that labour was more difficult, the highest in more than a year, signalling that supply factors remain a larger constraint on production than before the pandemic.

It is unlikely that, within a reasonable range of potential outcomes, this Review would be capable of affecting business conditions in the aggregate. However, as earlier noted, over two-thirds of modern award-reliant employees are located in four industry divisions. If industry divisions which are in the non-market sector are excluded, three industry divisions — Retail trade, Accommodation and food services and Administrative and support services — account for about 64 per cent of modern award-reliant employees located in the market sector. Any impact of this Review upon business will be most felt in these three sectors. The non-market sector includes private businesses, such as National Disability Insurance Scheme (NDIS) service providers and early childhood education and care centres, but these generally have their income or wages costs supported by government subsidies. NDIS service providers, for example, operate under a government-funded cost model which prices labour in accordance with the current wage rates in the Social, Community, Home Care and Disability Services Award 2010[57] (SCHADS Award) and thus are not exposed to the cost of wage increases arising from the Review process.

The key indicators for the three most modern award-reliant sectors are set out in the following table.

Table 8: Key indicators of business conditions in the most modern award-reliant market sector industry divisions

December quarter 2024 (%)	December quarter 2023 (%)	5-year average to December quarter 2024 (%)
Retail trade
Output growth	0.8	0.1	2.3
Business profit growth^#*	−8.2	3.4	4.6
Business profit margins^#^	7.0	7.0	6.4
Wages to sales ratio^#	9.9	9.8	10.2
Filled jobs	2.8	−0.1	2.8
Hours worked	3.2	0.4	2.5
Labour productivity	−2.3	−0.4	−0.2
Total labour costs	3.9	5.7	6.0
Accommodation and food services
Output growth	−1.1	−1.1	1.3
Business profit growth^#*	2.3	14.7	4.5
Business profit margins^#^	10.0	10.0	11.1
Wages to sales ratio^#	23.2	22.3	23.7
Filled jobs	−1.9	−0.1	−0.3
Hours worked	−1.6	−4.1	−1.7
Labour productivity	0.5	3.2	3.0
Total labour costs	4.9	3.5	5.8
Administrative and support services
Output growth	0.5	0.1	2.2
Business profit growth^#*	7.1	43.9	8.9
Business profit margins^#^	8.0	8.0	9.3
Wages to sales ratio^#	50.3	49.8	51.4
Filled jobs	2.8	2.3	2.2
Hours worked	−0.1	1.8	0.7
Labour productivity	0.7	−1.7	1.6
Total labour costs	3.2	5.3	5.0

Note: # Data are in original terms. * Business profits (unincorporated gross operating profit and company gross operating profit) are calculated based on the sum of profits in each of the last 4 quarters. ^ Profit margins are calculated as business gross operating profits to sales ratio. 5-year average includes quarters where government COVID‑19 subsidies were included in gross operating profit of businesses (mainly June quarter 2020 and December quarter 2020). Profit margins in these quarters were notably higher than historical averages.

Source: ABS, Australian National Accounts: National Income, Expenditure and Product, December 2024; ABS, Labour Account, Australia, December 2024; ABS, Business indicators, Australia, December 2024.

The consistent feature of these three sectors is that output and profits grew by less in 2024 than the five-year average. Notwithstanding this, each sector experienced reasonable profit margins for 2024 that are on par with their five-year averages. The wages to sales ratio has remained fairly stable in each sector, with no evidence of wages rising faster than sales. None of the sectors can therefore be said to be in crisis. Low output growth in 2024 likely reflects depressed demand for services as a result of higher interest rates. This can be expected to be reversed to some degree as monetary policy eases and economic growth improves. A return to increasing real household disposable income is likely to increase discretionary spending and in particular benefit the Retail trade and Accommodation and food services sectors. Retail turnover (which includes cafes, restaurants and takeaway food services) increased by 1.2 per cent in chain volume terms in the year through to the March quarter 2025, although it was flat for the March quarter 2025 itself.[58]

The Accommodation and food services sector shows some signs of weakness, with falling output growth and employment and hours worked over the last two years. However, two matters may be noted. First, because hours worked has fallen more than output, there has been reasonable growth in labour productivity. Second, despite falling employment, total labour costs in 2024 for the sector rose significantly, which likely reflects continuing recruiting difficulties in the sector. We also note that, despite the sectoral difficulties identified, business entries nonetheless exceeded business exits for the period 2023–24, with the number of businesses growing by 1.2 per cent.[59]

Two IBISWorld reports which concern the restaurants sector[60] and the cafes and coffee shops sector[61] referred to in the submissions of the Australian Restaurant and Cafe Association Ltd (ARCA), provide some insight into the smaller business segment of the Food and beverage services subdivision of the Accommodation and food services division. Both reports identify significantly lower profit margins than the ABS shows for the division as a whole, at 3.8 per cent for restaurants and 3.3 per cent for cafes and coffee shops, compared with 10 per cent reported by the ABS for all of Accommodation and food services.[62] There is insufficient information in the IBISWorld reports to know if profit margins were calculated on the same basis as the ABS.

The key recent challenges identified in the IBISWorld reports have been pressures on revenue due to the effect of cost-of-living increases on discretionary expenditures, and competitive pressures in circumstances where there are low barriers to the entry of new businesses. The reports do not identify wages as a significant input cost issue and, indeed, indicate a low level of annualised wages costs growth over the past five years (0.6 per cent for restaurants and 1.4 per cent for cafes and coffee shops). For restaurants, the forecast is that ‘improving consumer confidence and expanding discretionary incomes are set to support industry revenue’, but that tough competition will cause restaurants to ‘focus on improving operational efficiencies to limit costs and boost profitability’. For cafes and coffee shops, greater consumer demand is expected to expand industry revenue and, ‘[a]lthough competition will heighten, premiumisation trends and ongoing consumer interest in health and ethical consumerism will support profitability…’. Revenue is forecast to grow by an annualised rate of 0.7 per cent for restaurants and 1.4 per cent for cafes and coffee shops over the five years to 2029–30.

Against this background, ARCA’s submissions make three particular points worth noting. First, notwithstanding that it proposes that the Review award a sub-inflation increase of 2 per cent, it submits more generally that moderate wage increases support consumer demand and ‘have multiplier effects, boosting local economies without significantly impacting inflation’. This proposition is broadly consistent with the University of California, Berkeley Institute for Research on Labor and Employment minimum wage model[63] which, as discussed in the AWR 2018 decision,[64] takes into account the beneficial effects of higher minimum wages on consumer demand as well as the detrimental effect on business costs to assess the net effect. The Accommodation and food services sector, as well as the Retail trade sector, would be well‑placed to benefit from any increase in consumer demand generated by increases to minimum wages. Second, it identifies that ‘[h]igher increases (e.g., 5% or more)’ may have disemployment effects. This amount is outside the range of proposed increases earlier discussed. Third, ARCA confirms that the Accommodation and food services sector faces critical shortages in roles such as chefs and cooks.

In respect of the s 134(1)(f) consideration, it is obviously the case that any increase in modern award minimum wages will cause an increase in employment costs for business, with this effect most felt in the most modern award-reliant sectors. Any increase awarded as a result of this Review will, as a cost to business, be in addition to the increase to the Superannuation Guarantee contribution rate from 11.5 to 12 per cent that will take effect on 1 July 2025. The question is whether this will cause discernible detriment to business. In most cases, we consider that it will not. Because the labour market remains strong, moderate increases in modern award minimum wages within the range earlier identified are unlikely to involve a significant departure from the market price of labour. The support to consumer demand provided by modern award minimum wage increases will be a factor offsetting the cost impact to business. However, for small businesses on low profit margins that are already facing challenges to their viability, the cost of such wage increases may constitute a risk factor. The Accommodation and food services sector, as earlier stated, is one which shows signs of weakness, and restaurants and cafes in particular are usually small businesses with lower profit margins operating in a very competitive market. The effect of modern award wage increases on this sector, and small businesses in other sectors in comparable circumstances, is therefore a moderating factor in our consideration. However, this should not be overstated given the positive prospects for the Accommodation and food services sector, and the Retail trade sector, benefitting from an increase to discretionary spending arising from improvements to real household disposable incomes. We also take into account that that there has, as earlier discussed, been labour productivity growth in the market sector over the last five years, as a factor relevant to capacity to pay. We do not consider it likely that increases to modern award minimum wages within the range earlier discussed would affect business productivity or increase the regulatory burden on business.

Gender equality

Sections 284(1)(aa) and 134(1)(ab), which were added to the FW Act by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (SJBP Act), identify the achievement of gender equality as an overarching ‘need’ which must be taken into account in the exercise of the Commission’s modern award powers. Under s 284(1)(aa) ‘ensuring equal remuneration for work of equal or comparable value’, ‘eliminating gender-based undervaluation of work’ and ‘addressing gender pay gaps’ are identified as means by which this overarching need may be met. Section 134(1)(ab) likewise identifies the first two of these as means to achieve gender equality; the third means identified in s 134(1)(ab), ‘providing conditions that facilitate women’s full economic participation’, is concerned with terms of employment other than rates of pay and is thus not relevant to this Review.

‘Ensuring equal remuneration for work of equal or comparable value’ and ‘eliminating gender-based undervaluation of work’ are overlapping concepts.[65] The former is defined in s 302(2) of the FW Act to mean ‘equal remuneration for men and women workers for work of equal or comparable value’. The latter is a well-established industrial concept which, in the modern award context, refers to a situation where minimum rates in an award have been established on the basis of an undervaluation of the work to which the minimum rates apply that has occurred for gender-related reasons. ‘Gender pay gaps’ refers to the various measures of the difference in the earnings of men and women.

The mandatory considerations in ss 284(1)(aa) and 134(1)(ab) are expressed in imperative terms: there is a ‘need’ to achieve gender equality and this may be done by ‘ensuring’ equal remuneration for work of equal or comparable value, ‘eliminating’ gender-based undervaluation of work and ‘addressing’ gender pay gaps. In light of this, the Expert Panel in the AWR 2023 decision said:[66]

… we consider that as a result of the amendments to ss 134(1) and 284(1) made by the [SJBP Act], any issues of unequal remuneration for work of equal or comparable value or gender undervaluation relating to modern award minimum wage rates can no longer be left to be dealt with on an application-by-application basis outside the framework of the Review process. Such issues, insofar as they may be identified, should now be dealt with in the Review process or in other Commission-initiated proceedings between Reviews.

Consequently, as a result of the SJBP Act amendments, the issue of gender equality has become central to the Review process. It applies itself at two levels. The first is the extent to which the need to address gender pay gaps is to be taken into account in the quantification of any general increase to the NMW and modern award minimum wage rates. The second is whether any adjustments to specific awards are required to eliminate gender-based undervaluation in modern awards and ensure equal remuneration for work of equal or comparable value.

General wage increases and gender pay gaps

The gender pay gap may be measured in a number of ways. Based on the most recent available data, the gender pay gap as measured by reference to ordinary time earnings, whilst remaining significant, is continuing to reduce and has reached historic lows.

Table 9: Estimates of changes in the gender pay gap

Male earnings ($)	Female earnings ($)	Gender pay gap (%)	Male earnings ($)	Female earnings ($)	Gender pay gap (%)
Weekly
November 2024			November 2022
AWOTE	2072.70	1826.40	11.9	1907.10	1653.60	13.3
May 2023			May 2021
EEH adult* ordinary time cash earnings, non-managerial full-time	1911.80	1725.60	9.7	1809.10	1617.10	10.6
Hourly
EEH adult* ordinary time cash earnings, excluding casual loading	48.77	42.87	12.1	45.50	39.42	13.4
EEH adult* ordinary time cash earnings, excluding casual loading, for modern award‑reliant employees	29.64	29.42	0.7	27.69	27.47	0.8

Note: AWOTE refer to full-time adult employees. The gender pay gap is calculated as the difference between female and male earnings, expressed as a percentage of male earnings. * Adult refers to employees paid an adult rate.

Source: ABS, Average Weekly Earnings, Australia, November 2023; ABS, Microdata: Employee Earnings and Hours, Australia, May 2023; ABS, Average Weekly Earnings, Australia, November 2021; ABS, Microdata: Employee Earnings and Hours, Australia, May 2021.

As has been observed in recent Review decisions, because modern awards only apply to about 20.7 per cent[67] of the employee workforce, and the wages of the modern award‑reliant workforce constitute only about 10.5 per cent[68] of the national wage bill, it is not possible to eliminate the aggregate gender pay gap by means of adjusting modern award wage rates alone. The gender pay gap for modern award‑reliant employees is narrow, indicating that the gender pay gap is most significant amongst that part of the workforce who are paid above-award rates of pay and are therefore not directly affected by Review decisions. Notwithstanding this, because of the predominance of women in the modern award‑reliant workforce, an adjustment to modern award minimum wages which exceeds wages growth in the labour market as a whole will have an effect, albeit small, in narrowing the aggregate gender pay gap. This is a matter favouring an increase of this nature. In addition, because the modern award‑reliant workforce is concentrated in certain sectors of the economy, higher increases in modern award wage rates will have more significant effects upon the aggregate gender pay gap in those sectors. In this context, we note that the aggregate gender pay gap in the four most modern award‑reliant industry divisions remains significant, even though in three of these divisions there is a gender pay gap amongst modern award-reliant employees in favour of women.

Table 10: Gender pay gap in the most modern award-reliant industry divisions

Industry	Gender pay gap — all employees (%) (AWOTE, November 2024)	Gender pay gap — modern award-reliant employees (%) (EEH, May 2023)
Accommodation and food services	10.4	-4.5
Retail trade	9.9	-3.6
Health care and social assistance	21.6	-7.2
Administrative and support services	17.8	3.3

Note: Negative percentages indicate that female earnings are higher than male earnings.

Source: ABS, Average Weekly Earnings, Australia, November 2024; ABS, Microdata: Employee Earnings and Hours, Australia, May 2023.

Insofar as adjustments to modern award minimum wages may contribute to closing the gender pay gap, our view is that the most effective way of doing this is to continue to review modern award classifications applying to highly feminised occupations to identify, and eliminate, gender-based undervaluation. We discuss this review process further below.

Ensuring equal remuneration for work of equal or comparable value and eliminating gender-based undervaluation in specific modern awards

The AWR 2023 decision commenced the process of reviewing specific awards to examine whether they ensured equal remuneration for work of equal or comparable value or were subject to gender-based undervaluation. The decision identified a number of potential issues which required consideration in this context. It was determined that a research project should be undertaken to identify occupations and industries in which there is gender pay inequity and potential undervaluation of work and qualifications to inform and underpin consideration of gender pay equity issues in future Reviews. This research project was undertaken in two stages after the 2022–23 Review. The first stage of the project was completed with the publication of a report, Gender-based Occupational Segregation: A National Data Profile (Stage 1 Report), prepared by the Social Policy Research Centre at the University of New South Wales on 15 November 2023. The Stage 1 Report identified 29 occupations covered by 13 modern awards which are large in size, over 80 per cent female, and located within feminised industry classes.[69] The second stage of the project involved the publication of the Stage 2 Report — Gender Pay Equity Research — Annual Wage Review 2023–24 (Stage 2 Report) prepared by the Commission’s own research staff on 4 April 2024. The Stage 2 Report examined the history of wage fixation for 12 of the 13 awards covering the highly‑feminised occupations identified in the Stage 1 Report and identified a number of indicia of gender‑based undervaluation in the history of these awards.[70]

Overlapping with the research project, Stage 3 of the work value proceedings for employees in the aged care sector was conducted, with the Stage 3 Aged Care decision[71] being published on 15 March 2024. This decision found that personal care workers, home care workers and assistants in nursing in the aged care sector had been the subject of historical gender-based undervaluation because their minimum award wage rates had been established on the basis of an alignment with the masculinised C10 rate in the C10 Metals Framework without any assessment of the work value of such workers ever having been carried out. The work of registered nurses (RNs) and enrolled nurses (ENs) in aged care was likewise found to have been subject to historical gender-based undervaluation. In the case of RNs, this was because, despite having transformed into a professional occupation for which a university degree was required for entry, the award minimum wage rates for nurses had never been aligned with the C1 rate in the C10 Metals Framework (for which at least a degree qualification is required).

In determining appropriate rates of pay to rectify this identified gender-based undervaluation, the Expert Panel in the Stage 3 Aged Care decision established two benchmark rates. First, for Certificate III-qualified personal care workers, home care workers and assistants in nursing, the Panel determined that the rate established by the SCHADS Award operating in conjunction with the Social, Community and Disability Services Industry Equal Remuneration Order 2012[72] for a Certificate III-qualified social and community service employee provided an appropriate benchmark. That Panel said that this rate (Caring Skills benchmark rate), which is currently $1269.80 per week, would:[73]

…[provide] appropriate guidance as to the rectification of historic gender undervaluation in respect of female-dominated ‘caring’ work. The adoption of such a benchmark rate for work of this nature, in replacement of the C10 rate, would provide a stable anchor point for a modern award system which ensures gender equality in the valuation of work.

Second, for RNs with a four-year degree, the Panel adopted the C1(a) rate in the C10 Metals Framework, currently $1525.90 per week, as the appropriate benchmark (C1(a) benchmark rate). The Panel determined that both benchmark rates could be regarded as free from gender assumptions.

A further development at about the same time was that, on 9 February 2024, the Australian Nursing and Midwifery Federation lodged an application (matter AM2024/11) (Nurses and Midwives case) to vary the wage rates for nurses other than aged care nurses in the Nurses Award 2020[74] (Nurses Award) on work value and gender-based undervaluation grounds. The application seeks a rate of pay for a degree-qualified RN Level 1, Pay Point 1, which is broadly equivalent to the C1(a) benchmark rate.

Having regard to these developments, the Expert Panel in the AWR 2024 decision considered and determined which occupations and awards should be reviewed as a priority in respect of the elimination of potential gender‑based undervaluation (Priority Awards Review).[75] The priorities which were chosen (as further clarified and particularised in a statement published on 20 September 2024)[76] were:

·pharmacists covered by the Pharmacy Industry Award 2020[77] (Pharmacy Award);
·health professionals, pathology collectors and dental assistants covered by the Health Professionals and Support Services Award 2020[78] (HPSS Award);
·social and community services employees, crisis accommodation employees and home care employees in disability care covered by the SCHADS Award;
·dental assistants and dental/oral therapists covered by the Aboriginal and Torres Strait Islander Health Workers and Practitioners and Aboriginal Community Controlled Health Services Award 2020[79] (ATSIHW Award); and
·children’s services employees covered by the Children’s Services Award 2010[80] (CS Award).

In response to specific submissions advanced by the Flight Attendants’ Association of Australia (FAAA) concerning gender-based undervaluation in the Aircraft Cabin Crew Award 2020[81] (ACC Award), the Expert Panel in the AWR 2024 decision determined that the Commission should undertake a research project concerning the history of the ACC Award, which might assist in informing any future proceedings to vary that award.[82] This research project was subsequently undertaken by the Commission’s research staff and, on 28 February 2025, the Commission published a report, Gender pay equity research: Aircraft Cabin Crew Award 2020[83] (ACC Award Report), setting out in detail the history of the ACC Award and its antecedent award.

The hearing for the Priority Awards Review was conducted over three weeks in December 2024 before an Expert Panel. On 16 April 2025, the Panel issued the Priority Awards Review decision.[84] It determined that each of the priority occupations and awards had been the subject of gender-based undervaluation, and that its findings in this respect constituted work value reasons justifying the variation of the award wage rates applying to each category of employees.[85] The Panel varied the Pharmacy Award to provide for the first of three phased increases to implement a revised wages structure based on an alignment with the C1(a) benchmark rate.[86] In respect of each of the other categories of employees, the Panel set out its provisional proposals to vary the applicable awards to implement new classification and wages structures. In the case of health professionals covered by the HPSS Award and dental therapists covered by the ATSIHW Award, the new classification and wages structures were based on an alignment with the C1(a) benchmark rate and, in respect of the subject categories of employees covered by the CS Award, they were based on an alignment with the Caring Skills benchmark rate. In respect of the SCHADS Award, they were based on an alignment with both the Caring Skills benchmark rate and the C1(a) benchmark rate. The Panel has now commenced a process of conferences with interested parties to ascertain the nature and scope of any issues that may be raised in response to its provisional proposals. It is anticipated that, at least for some of the awards, it will be necessary for there to be further hearings to determine the remaining contested issues. It is likely, therefore, that the Priority Awards Review will take the balance of 2025 to be finalised.

The Priority Awards Review decision set out the principles which guided the Expert Panel in its consideration in a manner consistent with the statutory framework.[87] These principles may be summarised as follows:

(1)The occupational group in question should be female-dominated. The percentage of the relevant workforce required to meet that standard has usually been accepted as 60 per cent female or more.

(2)It is then necessary, consistent with s 157(2B) of the FW Act, to undertake a historical analysis of the development of the rates of pay in the award in question to ascertain whether there are any indicia of gender‑based undervaluation. The most significant of these indicia are:

·whether the award minimum wage rates have ever been the subject of an independent work value assessment involving the consideration of skills and responsibilities of the work in question and the environment in which it has been performed;
·whether, if any work value assessment has occurred, the outcome has been constrained by the application of the C10 Metals Framework Alignment Approach or the requirement in previous wage-fixing principles that only work value changes from a fixed datum point may be considered;
·whether the wage rates are the result of a consent arrangement which does not provide transparency as to the basis upon which the rates were fixed;
·whether the rates have been established on the basis of an automatic application of the C10 Metals Framework Alignment Approach without any further consideration as to whether the key classification in the award in question and the C10 classification involve equality or comparability of work value beyond a mere equivalence in qualifications; and
·in the case of classifications requiring a degree qualification, whether the pay rates have been established on the basis of an alignment with the C1 rate at a minimum or, if this has not occurred, whether there has been a work value assessment providing a justification for this.

(3)The process of identifying gender‑based undervaluation also requires a close examination, based on agreed facts or evidence, of the skills and duties of the work in question. An important element of this is to analyse whether the work is of a ‘caring’ nature requiring the exercise of ‘soft’ or ‘invisible’ skills, including but not limited to the skills of ‘interpersonal and contextual awareness, verbal and non-verbal communication, emotion management and dynamic workflow coordination’, which may not have previously been properly recognised or valued because of past assumptions based on gender. If the award rates have been set simply on the basis of the application of the C10 Metals Framework Alignment Approach, then it may be presumed, in the absence of evidence that indicates otherwise, that any ‘soft’ or ‘invisible’ skills found to be required for the performance of work have not been taken into account in the fixation of the wage rates.

The main countervailing factor is the national economy’s continuing poor performance in productivity growth, with labour productivity not having grown since the pre-pandemic period. However, disproportionate growth in employment in the non-market sector has distorted the productivity picture. There has been modest growth in labour productivity in the market sector over the past five years, but this has been outweighed by productivity loss in the non-market sector where the effective measurement of labour productivity is problematic. Taking these matters into account, we do not consider that the overall lack of productivity growth is a reason not to do anything to restore the real value of modern award wage rates, but it must operate as a restraining factor on the size of the real increase to be awarded.

Business has clearly faced challenging conditions in 2024 but, for the reasons earlier outlined, business conditions remain in moderate health, with prospects for improvement over the next year. In respect of those industry sectors with the highest numbers and proportions of modern award-reliant employees, the picture is more mixed, with the Accommodation and food services sector in particular showing signs of weakness with a reduction in output, filled jobs and hours worked, and relatively significant increases in labour costs likely associated with a shortage of skilled labour. However, this sector has also had the benefit of reasonable labour productivity growth in recent years.

The other considerations we are required to take into account under ss 284(1) and 134(1) either have neutral weight or are not relevant to the fixation of modern award minimum wages.

Having regard to all the matters which we are required to take into account under s 284(1) of the FW Act, our conclusion is that that the NMW should be increased by 3.5 per cent. In respect of s 284(1)(e), the special NMWs applicable to junior employees, employees to whom training arrangements apply and employees with a disability who are award/agreement-free will be as set out in section 10 of our decision consistent with the established approach earlier described in section 7. The casual loading for award/agreement-free employees will remain at 25 per cent. Consistent with s 287 of the FW Act, the NMW order we make by this decision will come into operation on 1 July 2025.

For the reasons we have earlier outlined, we consider that the balance of the mandatory considerations in ss 284(1) and 134(1), as relevant to this Review, favour a real increase to modern award minimum wage rates. Over the last three annual wage reviews, any correction to the ongoing reduction in the real value of modern award minimum wages has repeatedly been deferred out of concern for the inflationary environment. This has adversely affected the living standards of modern award-reliant employees, who are disproportionately low-paid, female and working only part-time hours. We consider that it is necessary for us to take some action now lest this reduction in real wages become permanently embedded in the modern award system. The return of inflation to the RBA’s target range and a concomitant easing in interest rates provide us with the opportunity to do so.

Moderating factors on the size of the real increase to be awarded include the lack of overall productivity growth in the economy, the cost to employers of the final 0.5 per cent increase to the Superannuation Guarantee contribution rate which will take effect on 1 July 2025, and some indications of weakness in the Accommodation and food services sector in which over 20 per cent of modern award-reliant employees are located. We also take into account that Australia’s economic prospects are likely to be less favourable because of global economic uncertainty caused by the shifting US trade policies.

Weighing all these matters, and taking into account the rate of the NMW we have set, our decision is to increase minimum wage rates in all modern awards by 3.5 per cent. In accordance with s 286, the variations to modern awards to increase minimum wage rates by this amount will come into operation on 1 July 2025.

We do not consider that the amount of the increase we have determined will, in the context of continuing strength in the labour market, have any discernible disemployment effects. The increase is slightly higher than projected WPI growth in the economy over the next year, and may therefore improve somewhat the relative position of the low paid in the labour market. Based on our earlier analysis of the effect of Review decisions on wages growth generally, we estimate that the increase we have determined will contribute less than 0.4 of a percentage point to the WPI for the 12 months to March 2026. This is insufficient to have any significant adverse impact upon inflation, employment growth, productivity growth or business competitiveness in the national economy. Nor do we consider, having regard to continued moderate growth in non-mining business profits and the prospect of some recovery in consumer demand as a result of interest rate reductions and increasing real household disposable income, that the increase to modern award wage rates we have determined will have any adverse impact of significance upon business. That there has been modest growth in labour productivity in the market sector over the past five years is indicative of some capacity to pay an increase of this size.

We acknowledge that the increase to the NMW and modern award minimum wages which we have determined will not fully correct for the reduction in real wages which modern award-reliant workers have suffered over the past four years. One measure which we considered in this Review was a higher level of wage increase for the lowest paid — that is, employees paid at the C13 rate or below. There is, we consider, some justification for phasing out the C13 rate over time such that the C12 rate becomes the lowest pay rate applicable to ongoing employment in the modern award system. Such a course would assist the position of the lowest paid while not distorting relativities between classifications above this level. We have ultimately decided not to take this course in this Review, principally because some award classifications at the C13 rate have only recently moved up from the C14 rate, or rates below the C13 rate, as a result of the C14 rates review. This is particularly the case with the lowest classifications applicable to ongoing employment in the Horticulture Award and the Pastoral Award, where the increase from the C14 rate to the C13 rate only took effect on 1 April 2025. This will be an issue for consideration in the 2026 Review, as will be the extent to which the reduction in the real value of modern award wages which has occurred since 2021 may by then be fully remedied.

The increase we have determined may make a small contribution to narrowing the gender pay gap for the reasons earlier outlined. However, the main contribution to the achievement of gender equality consistent with ss 284(1)(aa) and 134(1)(ab) of the FW Act will continue to be the review of identified priority awards in order to eliminate gender-based undervaluation and ensure equal remuneration for work of equal or comparable value. As set out in section 4 of this decision, the next priority will be to review the professional classifications in modern awards which have not yet been the subject of consideration in accordance with the applicable principles stated in the Priority Awards Review decision. The Commission will initiate proceedings in this respect in July 2025.

Conclusion

This section sets out the outcome of this Review and other relevant matters.

The national minimum wage order will contain:

(a)A national minimum wage of $948.00 per week or $24.95 per hour;

(b)Two special national minimum wages for award/agreement-free employees with a disability: for employees whose productivity is not affected, a minimum wage of $948.00 per week or $24.95 per hour based on a 38-hour week, and for employees whose productivity is affected, an assessment under the Supported Wage System, subject to a minimum payment fixed under Schedule A to the order;

(c)Wages provisions for award/agreement-free junior employees based on the percentages for juniors in the Miscellaneous Award 2020 applied to the national minimum wage;

(d)The apprentice wage provisions and the National Training Wage Schedule in the Miscellaneous Award 2020 for award/agreement-free employees to whom training arrangements apply, incorporated by reference; and

(e)A casual loading of 25 per cent for award/agreement-free employees.

The NMW order will operate from 1 July 2025, and will take effect in relation to a particular employee from the start of the employee’s first full pay period on or after 1 July 2025.

Modern award minimum wages will be increased by 3.5 per cent. The variation determinations in respect of all modern awards, modern enterprise awards and State reference public sector awards will operate from 1 July 2025 and take effect in relation to a particular employee from the start of the employee’s first full pay period on or after 1 July 2025.

The determinations necessary to give effect to the increase in modern award minimum wage rates will be made available in draft form shortly after this decision. Determinations varying the modern awards will be made as soon as practicable and the modern awards including the varied wage rates will be published as required by the FW Act.

Our determination in this Review is that the wage rates in any remaining transitional instruments and copied State awards are also increased by 3.5 per cent. This determination comes into operation on 1 July 2025 and takes effect in relation to a particular employee from the start of the employee’s first full pay period on or after 1 July 2025. The Commission is not required to publish the rates of the wages in the relevant transitional instruments or copied State awards as so varied, and accordingly we will not do so.

We wish to express our appreciation to the parties who participated in this Review for their contributions and to the staff of the Commission for their assistance.

PRESIDENT

Appearances:

M Cowgill, A Cagliarini, J Bullen and N Loan for the Australian Government represented by the Department of Employment and Workplace Relations and The Treasury.
B Moxham and T Greenwell for the Australian Council of Trade Unions.
P Grist, S Schmitke and A Cameron for the Australian Chamber of Commerce and Industry.
B Ferguson and J Wilson for The Australian Industry Group.
C Massy, counsel, T Prisk, solicitor and T Barnes for the Australian Catholic Council for Employment Relations (on behalf of the Australian Catholic Bishops’ Conference).
J Katarzynski for the United Workers’ Union.
W Lambert for Australian Restaurant and Cafe Association Limited.
S Manickam for the Restaurant & Catering Industry Association of Australia.

Hearing details:

2025.

Sydney:
21 May.

Appendix 1: List of submissions by parties

Initial / post-Budget submissions (4 April 2025 round)

Party	Date of submission
South Australian Government	26/03/2025
Australian Labor Party	02/04/2025
Victorian Government	02/04/2025
Australian Business Industrial and Business NSW	03/04/2025
AUSVEG	03/04/2025
Council of Small Business Organisations of Australia	03/04/2025
New South Wales Government	03/04/2025
Australian Catholic Council for Employment Relations	04/04/2025
Australian Chamber of Commerce and Industry	04/04/2025
Australian Council of Social Service	04/04/2025
Australian Council of Trade Unions	04/04/2025
The Australian Industry Group	04/04/2025
Australian Manufacturing Workers’ Union	04/04/2025
Australian Services Union	04/04/2025
Australian Restaurant & Cafe Association Ltd	04/04/2025
Australian Retailers Association and National Retail Association	04/04/2025
Flight Attendants’ Association of Australia	04/04/2025
Housing Industry Association	04/04/2025
Master Grocers Australia Limited	04/04/2025
National Farmers’ Federation	04/04/2025
Pardey, Ashley	04/04/2025
Restaurant & Catering Industry Association	04/04/2025
South Australian Wine Industry Association	04/04/2025
United Workers’ Union	04/04/2025
Queensland Government	17/04/2025
Western Australian Government	02/05/2025
Australian Government	16/05/2025

Reply submissions (2 May 2025 round)

Party	Date of submission
Australian Services Union	30/04/2025
The Pharmacy Guild of Australia	30/04/2025
Australian Chamber of Commerce and Industry	02/05/2025
Australian Council of Trade Unions	02/05/2025
The Australian Industry Group	02/05/2025
Qantas Group	02/05/2025
The Australian Retailers Association and The National Retail Association	02/05/2025

Supplementary submissions / responses to questions on notice (16 May 2025 round)

Party	Date of submission
Australian Catholic Council for Employment Relations	16/05/2025
Australian Chamber of Commerce and Industry	16/05/2025
Australian Council of Trade Unions	16/05/2025
The Australian Industry Group	16/05/2025
New South Wales Government	16/05/2025
Professionals Australia	16/05/2025
Australian Government	20/05/2025

Oral submissions (at 21 May 2025 consultation hearing)

Australian Catholic Council for Employment Relations
Australian Chamber of Commerce and Industry
Australian Council of Trade Unions
Australian Government (represented by the Department of Employment and Workplace Relations and The Treasury)
Australian Industry Group
United Workers’ Union
Australian Restaurant and Cafe Association Limited
Restaurant and Catering Industry Association of Australia

Post-hearing submissions

Party	Date of submission
Australian Council of Trade Unions	22/05/2025

Appendix 2: Provisional list of the classifications requiring a university degree qualification and awards to be the subject of review

Award code	Award title	Classification name
MA000001	Black Coal Mining Industry Award 2020	‘Degree qualified’ graduate engineers and commercial officers (Groups I and J) [clauses B.2.3(a)–(b)].
MA000006	Higher Education Industry—Academic Staff—Award 2020	Teaching and research academic staff — Level A [clause A.1.1].
MA000006	Higher Education Industry—Academic Staff—Award 2020	Research academic staff (incl. creative disciplines) — Level A [clause A.2.1].
MA000007	Higher Education Industry—General Staff—Award 2020	Higher Education Worker Level 5 (HEW 5) [clause A.2.5] Higher Education Worker Level 6 (HEW 6) [clause A.2.6] Higher Education Worker Level 7 (HEW 7) [clause A.2.7] Higher Education Worker Level 8 (HEW 8) [clause A.2.8] Higher Education Worker Level 9 (HEW 9) [clause A.2.9] Higher Education Worker Level 10 (HEW 10) [clause A.2.10]
MA000015	Rail Industry Award 2020	Clerical, Administrative and Professional Classifications, Levels 3–8 [Schedule A].
MA000031	Medical Practitioners Award 2020	All classifications require undergraduate degree [clause 12]. Other classifications identify postgraduate requirements including: Intern [clause 12.1] Resident Medical Practitioner [clause 12.2] Career Medical Practitioner [clause 12.5]
MA000049	Airport Employees Award 2020	Professional Engineers, Level 1–5; ‘Qualified engineer’ Level 1 [clause A.4] Administrative services officer Level 3 [clause A.2.3]
MA000064	Hydrocarbons Field Geologists Award 2020	Trainee mudlogger [clause 10.1]. Competent mudlogger [clause 10.2]. Senior mudlogger [clause 10.3]. Data engineer [clause 10.4].
MA000065	Professional Employees Award 2020	All classifications in Schedules A and B, starting at Level 1 — Graduate professional [clause A.1.1].
MA000066	Surveying Award 2020	Professional surveyor [clause A.15]
MA000075	Educational Services (Post-Secondary Education) Award 2020	Level A academic teacher [clause A.7.1] Teachers employed in English language colleges or in TESOL courses categories A, B, and C [clause B.2.1] Teachers other than TESOL teachers categories A, B, and C [clause B.3.1] General Staff Level 4 [clause C.1.7(b)] General Staff Levels 5 to 9 [clauses C.1.8–C.1.12]
MA000076	Educational Services (Schools) General Staff Award 2020	Levels 5–8 [clauses A.2.5–A.2.8]
MA000078	Book Industry Award 2020	Level 1 — Trainee book editor [clause A.1.1(a)]
MA000079	Architects Award 2020	Level 1 — Graduate of Architecture [clauses A.1, 2]
MA000081	Live Performance Award 2020	Production and Support Staff Level 8 [clause A.10.2]
MA000088	Electrical Power Industry Award 2020	Professional / Managerial / Specialist Grade 5 [clause A.4.1]
MA000091	Broadcasting and Recorded Entertainment Award 2020	Performers [clause E.2.2(b)] Subtitling editor [clause A.1.1(h)]
MA000098	Ambulance and Patient Transport Industry Award 2020	Ambulance Officer (AO) and Ambulance Paramedic (AP) [clause A.1.1]. Intensive Care Paramedic [clause A.1.3] Station Officer/Team Manager [clause A.1.4] Assistant Station Officer (ASO) [clause A.1.5] Regional Relieving Officer (RRO) [clause A.1.6] Clinical Support Officer (CSO) [clause A.1.10] Communications Officer [clause A.1.13] Senior Station Officer [clause A.1.15]
MA000112	Local Government Industry Award 2020	Level 7 [clause A.7.6] Level 9 [clause A.9.6] Level 10 [clause A.10.6] Level 11 [clause A.11.6].
MA000113	Water Industry Award 2020	Level 7 [clause A.7.6]. Level 9 [clause A.9.6]. Level 10 [clause A.10.6].
MA000116	Legal Services Award 2020	Level 5 — Law Graduate [clause A.6.1].
MA000118	Animal Care and Veterinary Services Award 2020	Veterinary surgeon — Level 1A [clause A.3.1]
MA000121	State Government Agencies Award 2020	Administrative Officer Grade 4 [clause A.1.4] Technical Officer Grade 5 [clause A.2.6]. Professional Officer Grade 2 [clause A.3.2]. Professional Officer Grade 3 [clause A.3.3] Professional Officer Grade 5 [clause A.3.5]

[1] Fair Work Act 2009 (Cth) s 285(1) (‘FW Act’).

[2] FW Act ss 285(2)(a)(ii) and (c).

[3] Ibid ss 285(2)(a)(i) and (b).

[4] See the analysis in Annual Wage Review 2023–24 [2024] FWCFB 3500, 331 IR 248 (‘AWR 2024 decision’) [14]–[28].

[5] See [16] and Table 1 of this decision.

[6] Ibid.

[7] See [21] and Table 4 of this decision.

[8] See Table 3.

[9] The interpretation and application of the current statutory scheme for the conduct of the Review was the subject of detailed analysis in the Annual Wage Review 2022–23 decision [2023] FWCFB 3500, 323 IR 332 [12]–[45] (‘AWR 2023 decision’). That analysis is adopted for the purpose of this decision.

[10] A list of parties that filed submissions is set out in appendix 1 to this decision.

[11] AWR 2023 decision [2023] FWCFB 3500, 323 IR 332 [7]; AWR 2024 decision [2024] FWCFB 3500, 331 IR 248 [7].

[12] [2023] FWCFB 3500, 323 IR 332.

[13] Gender-based undervaluation – priority awards review [2025] FWCFB 74.

[14] [2024] FWCFB 3500, 331 IR 248.

[15] Josh Tomlinson, Characteristics of Employees on the National Minimum Wage (Fair Work Commission Research Report No 1/2024, February 2024).

[16] [2024] FWCFB 3500, 331 IR 248 [28].

[17] Ibid.

[18] Ibid [153].

[19] Justin Strong, David Rozenbes and Josh Tomlinson, A Profile of Employee Characteristics across Modern Awards – 2023 (Fair Work Commission Research Report No 1/2025, February 2025) (‘2025 Profile’).

[20] The 2023 EEH survey is the latest available. It is not expected that the results of the May 2025 EEH survey will be published before 2026.

[21] Kelvin Yuen and Josh Tomlinson, A Profile of Employee Characteristics across Modern Awards (Fair Work Commission Research Report No 1/2023, March 2023).

[22] Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Table 7.4.

[23] 2025 Profile 83, Table A6.

[24] Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Table 7.6.

[25] Ibid.

[26] The method of identifying ‘the low paid’ used in the 2025 Profile is explained at [95] below.

[27] 2025 Profile 24, Chart 5.

[28] Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Table 7.5.

[29] [2024] FWCFB 3500, 331 IR 248 [161].

[30] The award component of the WPI encompasses adjustments to State awards as well as to federal modern awards, so the effect of the AWR 2024 decision may have been slightly less than the 0.36 per cent award contribution for the September quarter 2024.

[31] [2023] FWCFB 3500, 323 IR 332 [56]–[57].

[32] Department of Employment and Workplace Relations, Workplace Agreements Database (December quarter 2024); Australian Bureau of Statistics (ABS), Labour Force, Australia, Detailed (March 2025).

[33] [2024] FWCFB 250; AE524516.

[34] [2024] FWCFB 314; AE525523.

[35] Martin McCarthy et al, Developments in Wages Growth Across Pay-setting Methods (Reserve Bank of Australia (RBA) Bulletin, 17 October 2024); AWR 2023 decision [2023] FWCFB 3500, 323 IR 332 [57].

[36] Penalty Rates decision [2017] FWCFB 1001, 256 IR 1 [229].

[37] RBA, Statement on Monetary Policy (May 2025) (‘RBA May Statement’).

[38] RBA, In Brief: Statement on Monetary Policy (May 2025).

[39] RBA May Statement 28.

[40] Ibid 33, 36.

[41] [2024] FWCFB 3500, 331 IR 248 [71].

[42] Productivity Commission, Annual Productivity Bulletin 2025 (26 February 2025).

[43] Productivity Commission, Advances in Measuring Healthcare Productivity (April 2024).

[44] Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Chart 2.3.

[45] Commonwealth of Australia, Budget 2025–26: Budget Strategy and Outlook (Budget Paper No 1, 25 March 2025) 44.

[46] Ibid.

[47] RBA May Statement 30, 60.

[48] Ibid 25.

[49] Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Table 3.6.

[50] ABS, Counts of Australian Businesses, including Entries and Exits (27 August 2024, updated 8 May 2025).

[51] There have been 10,880 insolvencies to the end of March for 2024–25, compared to 11,053 insolvencies for all of 2023–24: Australian Securities & Investments Commission, Australian insolvency statistics, 12 May 2025.

[52] RBA, Financial Stability Review (April 2025).

[53] National Australia Bank, NAB Quarterly Business Survey Q1 2025 (17 April 2025).

[54] [2024] FWCFB 3500, 331 IR 248 [66].

[55] National Australia Bank, NAB Monthly Business Survey April 2025 (13 May 2025).

[56] Australian Chamber of Commerce and Industry and Westpac Banking Corporation, ACCI-Westpac Survey of Industrial Trends (Report No 254, March 2025).

[57] MA000100.

[58] ABS, Retail Trade, Australia, March 2025.

[59] ABS, Counts of Australian Businesses, Including Entries and Exits, July 2020 to June 2024.

[60] IBISWorld, Restaurants in Australia, December 2024.

[61] IBISWorld, Cafes and Coffee Shops in Australia, January 2025.

[62] It is possible to break down the profit margins separately for Accommodation businesses and Food and beverage services businesses, and this shows fairly similar margins in both sectors. In 2023–24, the most recent financial year available at the time of our decision, these were 14.4 per cent and 6.4 per cent, respectively. See ABS, Australian Industry, 2023–24 financial year.

[63] Michael Reich et al, Center on Wage and Employment Dynamics, Institute for Research on Labor and Employment, University of California, Berkeley, The effects of a $15 minimum wage in New York State (Policy Brief, March 2016).

[64] Annual Wage Review 2017–18 [2018] FWCFB 3500, 279 IR 215.

[65] FW Act ss 134(1)(ab),284(1)(aa).

[66] [2023] FWCFB 3500, 323 IR 332 [120].

[67] 2025 Profile 83, Chart 1.

[68] Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Table 7.5.

[69] Natasha Cortis et al, UNSW Social Policy Research Centre, Gender-based Occupational Segregation: A National Data Profile (Final Report, 6 November 2023) Table 5.1.

[70] Fair Work Commission, Stage 2 Report — Gender Pay Equity Research — Annual Wage Review 2023–24 (Report, 4 April 2024)).

[71] Aged Care Award 2010; Nurses Award 2020; Social, Community, Home Care and Disability Services Industry Award 2010 [2024] FWCFB 150, 331 IR 137 (‘Stage 3 Aged Care decision’).

[72] PR525485.

[73] Stage 3 Aged Care decision[2024] FWCFB 150, 331 IR 137 [173].

[74] MA000034.

[75] [2024] FWCFB 3500, 331 IR 248 [111]–[123].

[76] [2024] FWCFB 382.

[77] MA000012.

[78] MA000027.

[79] MA000115.

[80] MA000120.

[81] MA000047.

[82] [2024] FWCFB 3500, 331 IR 248 [129].

[83] Gender pay equity research: Aircraft Cabin Crew Award 2020 (Fair Work Commission Research Report No 3/2025, February 2025).

[84] [2025] FWCFB 74.

[85] Ibid [16].

[86] Ibid [17].

[87] Ibid [66]–[71].

[88] MA000076.

[89] MA000118.

[90] MA000047 clause 14.2.

[91] This was the approach taken in the Priority Awards Review: [2024] FWCFB 334 [2]–[5].

[92] MA000004.

[93] MA000003.

[94] MA000002.

[95] Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Chart 11.3; ABS, Labour Force, Australia, Detailed, February 2025. Note that the ABS defines ‘professionals’ to include diploma- and associate degree-qualified employees (ANZSCO Skill Level 2) as well as Bachelor’s or higher degree-qualified employees (ANZSCO Skill Level 1).

[96] Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Table 11.6; ABS, Microdata: Employee Earnings and Hours, Australia, May 2023.

[97] [2018] FWCFB 7621, 284 IR 121.

[98] [2021] FWCFB 2051.

[99] [2022] FWCFB 200, 319 IR 127.

[100] [2023] FWCFB 3500, 323 IR 332.

[101] [2024] FWCFB 150, 331 IR 137.

[102] [2025] FWCFB 74.

[103] MA000077.

[104] Matter AM2025/8.

[105] Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Table 14.3.

[106] [2024] FWCFB 3500, 331 IR 248 [131].

[107] Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Chart 6.6.

[108] Ibid Chart 6.21.

[109] [2024] FWCFB 3500, 331 IR 248 [132].

[110] Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Table 8.2.

[111] MA000010.

[112] [2024] FWCFB 3500, 331 IR 248 [72]–[73].

[113] 2025 Profile 63, Chart 23.

[114] Ibid 55, Chart 18.

[115] Ibid 51–53 (Section 6.1); Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Table 7.6.

[116] Fair Work Commission, Employees paid up to the C13 rate (Information Note, 20 May 2025).

[117] Ibid 4.

[118] Ibid Table 2.

[119] Ibid Table 3.

[120] [2021] FWCFB 3500, 307 IR 203.

[121] For a number of modern awards, the Expert Panel determined that there should be a later operative date because of exceptional circumstances arising from the COVID‑19 pandemic.

[122] MA000028.

[123] MA000035.

[124] MA000018.

[125] 2025 Profile 77, Table A3.

[126] [2024] FWCFB 3500, 331 IR 248 [79].

[127] Jamie van Netten and Josh Lipp, Award‑reliant employees in the household income distribution of employees: an update (Fair Work Commission Research Report No 2/2025, February 2025) Chart 2.

[128] Megan Bedford, Bruce Bradbury and Yuvisthi Naidoo, Budget Standards for Low-Paid Families (UNSW Report prepared for the Fair Work Commission, March 2023).

[129] Ibid 4.12.

[130] See ibid Table 8.

[131] Jamie van Netten and Josh Lipp, Award‑reliant employees in the household income distribution of employees: an update (Fair Work Commission Research Report No 2/2025, February 2025) Table 9.

[132] Ibid Table 5.

[133] Ibid Table 6.

[134] Ibid Table 10.

[135] Ibid Table 6.

[136] Ibid Table 10.

[137] MA000104.

[138] MA000020.

[139] MA000103.

[140] PR773884.

[141] [2023] FWCFB 3500, 323 IR 332 [142].

[142] [2024] FWCFB 3500, 331 IR 248 [133].

[143] Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Chart 12.1.

[144] Ibid Chart 12.5.

[145] Ibid.

[146] Ibid.

[147] See Table 1.

[148] Statistical Report — Annual Wage Review 2025 (Fair Work Commission, 15 May 2025) Chart 12.1. The EEH survey data in Table 1 has a slightly different result.

[149] ABS, Working Arrangements, August 2024.

[150] [2023] FWCFB 3500, 323 IR 332 [148].

[151] Ibid [155].

[152] Ibid [179]; [2024] FWCFB 3500, 331 IR 248 [154].

[153] [2022] FWCFB 3500, 315 IR 367.

[154] Ibid [135].

[155] Ibid [179].

[156] Ibid [196].

[157] [2023] FWCFB 3500, 323 IR 332 [165].

[158] Ibid [176].

[159] Ibid [179].

[160] [2024] FWCFB 3500, 331 IR 248 [147].

[161] Ibid [155].

[162] Ibid [157].

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