"The Expert Panel needs to be conscious of the mounting downside risks facing the economy when determining the national minimum wage and minimum award wages to provide a fair safety net," said Innes Willox, Chief Executive of the national employer association, Australian Industry Group.
"The Panel must strike a balance between the interests of employees and employers. In recent Annual Wage Reviews (AWRs), achieving this balance has proven an especially challenging task, due to the co-occurrence of high inflation alongside weak business conditions and poor productivity performance.
"The nature of this balance has shifted due to the economic shocks emanating from the conflict in the Middle East, which threatens to derail the incipient private sector recovery, while greatly exacerbating a pre-existing inflationary challenge that will weigh heavily on our economy," Mr Willox said.
Australian Industry Group points to five moderating factors relevant to this year's AWR:
- The Australian economy saw early signs of economic recovery during 2025, with household spending and business investment rising. However, this recovery was incipient and fragile, with rising inflation in the latter half of the year due to capacity limits requiring monetary policy to shift towards tightening.
- The economic shocks originating from the conflict in the Middle East will exacerbate these risks. Immediate impacts have been seen in surging fuel prices, with second order inflationary effects expected across the industrial supply chain over coming months. The future path of inflation is highly uncertain but is expected to head towards 5% by mid-2026, with deleterious consequences for many industries.
- Many parts of the economy were already displaying fragility before this external shock. The economy remains dependent on government stimulus and the non-market sector for growth, with poor business conditions in many industrial sectors. The labour market showed signs of weakening across 2025, particularly for lower skilled occupations. Business financial performance deteriorated again in 2025, with falling margins in the majority of industries pointing to reduced capacity to pay.
- Australia's productivity performance has been very poor since the last AWR. In 2024-25, productivity declined across all measured aggregates and in the majority of industries, and over the medium term it remains well below Australia's long-run trend. Productivity performance remains insufficient to permit an increase in real wages.
- There is a need to secure recent improvements in the labour market. Most indicators of access to employment have improved strongly since the pandemic, delivering greater participation for women, youth and the low-paid. Downside risks emanating from the global economic shock are likely to fall hardest on these parts of the labour market, warranting cautious wage increases that do not risk additional disemployment.
"We think there needs to be regard to the emerging nature of the global energy shocks – for which political and economic outcomes remain extremely uncertain," Mr Willox said.
"Given the current global and domestic volatility, it would be imprudent at this point to propose a specific number for a minimum wage increase for the Expert Panel to consider as part of its deliberations. There is a significant amount of economic data to examine in the coming weeks, as well as evidence of the impact of the shock created by the disruption caused by the conflict in the Middle East and measures taken in the Federal budget. In these circumstances, we will give fuller consideration to what a sensible wage outcome would entail in further submissions."
Read our full submission
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