SYDNEY, Australia: Australia's independent wage-setting body, the Fair Work Commission (FWC), has announced a 3.5 percent increase in the national minimum wage starting July 1.

This pay raise will benefit around 2.6 million of the country's lowest-paid workers. The new minimum wage will be A$24.94 (US$16.19) per hour, giving full-time workers an extra A$1,670 per year.

This increase is considered a real wage gain, as it is higher than the current rate of inflation. Inflation, which peaked at 7.8 percent in late 2022, has now dropped to 2.4 percent—well within the Reserve Bank of Australia's target range of two percent to three percent.

FWC President Adam Hatcher said the decision helps workers recover some of the income they lost during years of high inflation. He warned that failing to raise wages now would make those losses permanent and lower the standard of living for the lowest-paid workers.

Last year's wage increase was slightly higher at 3.75 percent, but inflation was also higher at the time, so workers didn't see real gains then.

The Australian Council of Trade Unions (ACTU) welcomed the decision. ACTU Secretary Sally McManus called it "a great outcome" for workers who were hit hardest by the rise in living costs after the COVID-19 pandemic. "Our lowest-paid workers are getting ahead again," she said.

Meanwhile, Australia's economy is showing signs of stability. The Reserve Bank recently cut interest rates to a two-year low to support growth, especially as global trade faces new risks. The labor market remains strong, with the unemployment rate steady at 4.1 percent for over a year. Most job growth has come from the public sector, and overall wage growth has stayed modest—easing concerns about a harmful wage-price spiral.