ACTU pushing 'above-inflation' wage increase in 2026 as real paypackets decline


Feb 5 2026
ABC News

ACTU Secretary Sally McManus has warned there'll be strikes if workers' wages can't catch up. 


Australia's biggest employers are under pressure to give their workers pay increases above 4 per cent this year, as real wages go backwards and the union movement ramps up pressure.

"In order to just keep up, you need a 4 per cent pay increase," the peak union body's secretary, Sally McManus, told ABC News today.

"People are going to want to get ahead, and that means more than 4 per cent.

"There will be strike action if we can't get wages that will keep us ahead."
Australia's annual inflation rate is currently at 3.8 per cent, which came in so unexpectedly hot that it prompted the Reserve Bank of Australia (RBA) to hike interest rates this week.

The next round of inflation data is due out on February 25.

The RBA's latest forecasts, found in its Statement on Monetary Policy released on Tuesday, show the RBA is forecasting annual inflation growth to run faster than annual wage growth until mid-2027.

When inflation runs faster than wages, it means the "real" value of wages or purchasing power is deteriorating, corresponding to a real wage decline.

From mid-2027, the RBA is then forecasting wages to grow faster than inflation (real wage growth), which will see purchasing power improve again.


ACTU justifies 4 per cent figure on housing costs
The Australian Council of Trade Unions (ACTU) says it will push for "above-inflation" pay increases in direct negotiations with major industries, as well as for the upcoming Annual Wage Review (AWR).

The AWR covers the minimum wage and industry minimum awards. Changes to this affect millions of workers, many of them female and part-time or casual workers.

Last financial year, the Fair Work Commission gave these workers an above-inflation boost of 3.5 per cent from July 2025. Inflation was running at 2.4 per cent at the time.

The ACTU is arguing that workers need more pay because housing costs are especially high.

"Landlords keep putting up rents," Ms McManus told ABC News today.

"Inflation there, or how much they're going up there, is 4 per cent.

"Your average worker is either a renter or they're a first home buyer and they're the ones under the most amount of cost-of-living pressure for a whole lot of reasons. Rents are part of it."


Sally McManus says the ACTU will push for strikes if employers don't offer wage increases. (ABC News)

The last round of inflation data showed housing inflation is at 5.5 per cent annually. This includes rents and home building costs but not the cost of buying property.

Broken down, rental inflation was at 3.9 per cent in the year to December, down from 4 per cent the month beforehand.

"Annual inflation for rents has eased over the past 12 months due to stable vacancy rates in most capital cities," the Australian Bureau of Statistics noted in its latest inflation data release.

The ABC has contacted major employers, including JB Hi-Fi, Kathmandu's owner KMD Brands, and Coles. So far, Woolworths and Myer both declined to comment.

Industry groups have also been contacted.

Higher wages could lead to job cuts, KPMG says
Chief economist at consulting firm KPMG Brendan Rynne says it is almost a case that workers should be careful what they wish for: higher wages would likely lead to job cuts.

"Ultimately you'd expect probably job losses to happen as a consequence," Dr Rynne says.

"Fundamentally, you can get employment growth or you can get wage growth. But you can't get both unless you get productivity growth."
Employment growth has been coming from the government (federal, state and local) sector much more than the private sector.

"Simply, the economy has been quite weak, particularly on the private side of the economy," he says.

"When you break the economy into the [private] market and the non-market sector in the 12 months to November there was about 185,000 new jobs created.

"When you look at that, the market sector had minus 5,000 jobs and the non-market sector had 190,000. So there's a weakness within the private side of the economy."

It comes down to productivity, KPMG's chief economist says. And sadly the easiest way to boost productivity is to get a smaller number of people to do more work.

"Businesses will deal with it — try to achieve productivity growth — by getting more per worker than they're currently getting. But at the expense of the number of workers."


What else do the RBA's forecasts say?
In its latest forecasts, the RBA said wages for workers (across both public and private sectors) paid under enterprise bargaining agreements (EBAs) and awards continued to grow more strongly over the year to September last year, than those for workers paid under individual arrangements.

"Wages paid under individual arrangements – which tend to be the most responsive to current labour market conditions – increased by 3.0 per cent over the year," it said.

RBA wages growth by method of setting pay Feb 2026 SOMP
It also said the recent weakness in productivity growth was contributing to elevated unit labour costs.

Working people to push for wage rises to counter housing pressures
February 5, 2026  ACTU.
Australian Unions will pursue above-inflation wage rises this year because of rising housing costs.

Working people will be pushing for pay rises across the board to counter high housing costs, the biggest cost-of-living pressure in household budgets.

Wages need to keep pace with essential expenses including rent costs, which have risen by 4% in the past year on top of steep rises over the last five years.

Both rent and mortgage payments for new homeowners are taking up a larger share of income, that will leave working people feeling like they are going backwards despite working hard unless addressed.

Workers will fight for higher pay in a broad range of sectors and in the upcoming Annual Wage Review which sets pay for low and minimum wage workers.

Workers will build on some of the recent wage growth through union-negotiated collective agreements which are the most successful means of achieving real wage growth.

Australian Unions will also push for broader housing reforms to make housing affordable.

Unions want the tax system to change to address tax concessions that are effectively pricing workers out of housing.

This includes scaling back capital gains tax discounts from 50% to 25% and limiting negative gearing concessions to one investment property with a phase in period.

Most government revenue comes from working people paying ordinary income tax, not from taxing the wealthy, corporations or levying rent on multi-nationals exporting Australia’s natural resources.

The tax system must stop loading up wage earners and start taxing other forms of income more fairly to take pressure of working Australians.

Workers feel strongly about housing affordability and the cost of living and are prepared to turn that pressure into collective action for better pay.

Quotes attributable to ACTU Secretary, Sally McManus:

“Working people will be pushing for pay rises this year because housing costs, rents and mortgage payments risk taking up more wages. Too many people cannot afford to live near where they work, even in regional parts of the country. 

“Higher wages and action on housing affordability must both occur. We cannot have wage increases eaten up by increasing rents.

“Australia’s tax system is upside down – working people pay first and in full, while wealth and windfall profits are undertaxed.

“Ordinary working people can’t shift their income to trusts or asset structures but pay every dollar through PAYG.

“When tax concessions push investment into property speculation instead of new housing and productive businesses, working people lose twice – through higher house prices and weaker wage growth.

“That’s why unions want to limit negative gearing and wind back capital gains tax discounts, so capital flows into more productive investment, not just bidding up house prices.

“The employers of Australia should support tax reform that addresses housing affordability and lifts the pressure on workers to carry the country with tax from income.

“If employers want less wages pressure, they should be getting behind action on housing affordability.”

Unions set sights on pay rises, threaten strike action

February 5 2026
Canberra Times

The ACTU says workers are more prepared to go on strike than ever to secure real wage increases.   

Unions are planning a year-long wages blitz, threatening strike action if workers aren't granted above-inflation pay rises to keep up with soaring costs.

The Australian Council of Trade Unions claims workers are more prepared to go on strike than ever before to secure real wage increases.

ACTU secretary Sally McManus said significant increases to the cost of housing meant union members would push for pay rises of at least four per cent a year.

"A huge amount of your budget is being eaten up by housing costs, and people are really in a situation where their only option to get ahead is wage increases," Ms McManus told ABC TV on Thursday.

"Young people are saying that we've had enough of this, and they are really pushing for better deal at work," she said.


The ACTU is flagging wage fights across the board, including over the minimum wage and through workplace agreements.

In 2025, minimum wages increased 3.5 per cent - halfway between the demands of businesses who wanted a smaller rise, and unions who wanted a larger one.

Sally McManus says union members would push for pay rises of at least four per cent a year.

Business groups have long argued productivity gains are needed before they can deliver significant pay rises, but Ms McManus said that was not the case.

"Every time a business says that they're deflecting," she said.

"(Businesses) have not been investing in training up workers ... or new equipment and capital, which are the things that lead to productivity increases."



Ms McManus said rising costs were driving a generational gap in living standards, which pay rises would help address, but warned broader action was needed to make housing more affordable.

She urged the government to pare back the capital gains tax concession for property investors - a move Labor is reportedly considering.

"... the government understands that there's a deep unfairness where if you work full time, that is not getting you to a position where you can ever buy a house," Ms McManus said.