Unions Demand Above-Inflation Wage Hikes Amid Strike Threats
Australian workers are increasingly demanding above-inflation wage hikes, with unions threatening strikes if their calls are unmet. As real wages decline, the pressure on major employers rises. Secretary of the Australian Council of Trade Unions (ACTU), Sally McManus, emphasizes the need for a minimum 4% pay increase to keep pace with inflation, which is currently at 3.8%.
The Inflation Context
The Reserve Bank of Australia (RBA) recently raised interest rates in response to unexpectedly high inflation. The next inflation update is expected on February 25. Current forecasts indicate that annual inflation growth will outstrip wage growth until mid-2027.
Impact on Workers
The ACTU argues that ongoing pay increases are crucial due to rising living costs, particularly in housing.
- Annual inflation rate: 3.8%
- Housing inflation: 5.5%
- Rental inflation in December: 3.9%
- Previous annual wage increase (July 2025): 3.5%
McManus explains, “Many workers are either renters or first-time home buyers, and they face significant cost-of-living challenges.” The last inflation data indicated that housing inflation, including rents, continues to strain household budgets.
Employer Responses
Employers such as Woolworths and Myer have declined to comment on wage demands, while union negotiations will cover key sectors during the upcoming Annual Wage Review (AWR).
The Economic Debate
Economist Brendan Rynne from KPMG warns that wage increases may lead to job losses. He suggests that significant wage growth and employment growth cannot coexist without improved productivity.
| Sector | Job Growth (last 12 months) |
|---|---|
| Private Sector | -5,000 jobs |
| Government Sector | 190,000 jobs |
Rynne notes that productivity gains often require fewer workers to achieve greater output. The RBA also stresses that wage growth is sustainable only when tied to rising productivity, a challenge the current economy faces.
Conclusion
The ongoing struggle for above-inflation wage hikes has significant implications for millions of Australian workers. As negotiations progress, the balance between fair pay and economic stability remains a critical issue for all stakeholders involved.
