The Albanese government has urged the Fair Work Commission to deliver a real wage rise for millions of low-paid workers, arguing minimum and award wages should increase faster than inflation as households grapple with mounting cost-of-living pressures.

The move was announced by Treasurer Jim Chalmers and Workplace Relations Minister Amanda Rishworth on Thursday.

‘The Albanese Government is backing another pay rise for minimum wage and award-reliant workers to help with the cost of living,’ a statement read. 

‘Today the government will lodge a submission to the Annual Wage Review recommending the Fair Work Commission award an economically sustainable real wage increase to Australia’s award workers.’

The group accounts for about 23 per cent of the workforce, or roughly 2.7 million people.

Although the submission stops short of nominating a specific percentage, it is widely seen as strengthening the ACTU’s push for a 5 per cent pay increase this year amid global economic uncertainty and higher interest rates.

If the union’s suggested rise were granted, the national minimum wage would climb from $24.95 an hour to around $26.19.

That would lift the full-time annual minimum wage by about $2,465 to approximately $51,761.

Any increase handed down by the commission would flow through to modern award rates, affecting millions more workers across sectors including retail, hospitality and care.

While some economists warn the decision may put upward pressure on inflation, Chalmers and Rishworth said it would ultimately support inflation falling. 

‘Conflict in the Middle East is compounding global economic uncertainty, and putting pressure on fuel prices, inflation and on family budgets,’ they said.

‘An economically sustainable real wage increase is consistent with underlying inflation returning to the RBA’s target band in 2026-27 and will provide further relief to lower income workers who are still doing it tough.

‘Low-paid workers are more exposed to unexpected financial shocks and they experience greater financial hardship, and we support lifting their wages,’ Rishworth said.

‘Our government believes the millions of baristas, care workers, clerks and cooks should get ahead.’

The Fair Work Commission will consider submissions in a hearing in May before deciding on an increase that takes effect in July. 

Earlier this week, ACTU secretary Sally McManus said rising rents and power bills had been straining household budgets, even before the Middle East conflict pushed petrol prices up.

‘Everyone knows the lowest paid workers in Australia are doing it tough because they have borne the brunt of cost-of-living increases as landlords put up rent and supermarkets and fuel companies pumped up prices,’ she said.

‘We will not accept the lowest-paid workers in Australia going backwards because of the Reserve Bank and Donald Trump.

‘What has been driving inflation is the cost of housing and petrol companies’ price gouging.’