2 June 2026
Cost Crunch – Wage Hike Adds Heat to Building Costs
The building and construction industry acknowledges today’s Annual Wage Review decision but is concerned that the increase, which is significantly above the level proposed by employers, will place additional pressure on a sector already grappling with elevated material costs, labour shortages, and tight contractual conditions.
The Fair Work Commission’s annual wage decision to increase the minimum wage by 4.75% applies across all modern awards and directly affect thousands of construction businesses.
While employers support fair and competitive wages, today’s higher than anticipated increase will be challenging for many businesses, particularly those locked into fixed price contracts where cost recovery is impossible.
Recent wage decisions have already lifted award rates substantially, with last year’s increase being 3.5%.
Will Frogley, Master Builders SA CEO, said the industry is concerned that this additional cost escalation may lead to reduced tendering activity, increased insolvency risk, and project delays, especially among small and medium-sized builders who form the backbone of Australia’s construction workforce.
“We respect the Commission’s role, but this decision will be difficult for many businesses to absorb,” he said.
“Builders are already operating on razor-thin margins. Without mechanisms to adjust fixed-price contracts or targeted government support, today’s increase risks further
destabilising of an industry that Australia relies on for housing, infrastructure, and jobs.”
Media contact: For more information, contact Amy Osborne on 0435 229 974
