Minimum wage increases from July are a positive step for many First Nations workers but financial issues remain for those on income support or working in Indigenous-led services.

The National Indigenous Employment and Training Alliance said the Fair Work Commission's decision to increase minimum wages by 3.5 per cent was welcomed but would not reach many Indigenous workers and services, and urged responsive funding models and increased support for First Nations communities.

Alliance chief executive Kylie Penehoe said although the increase was beneficial, it didn't address broader community challenges.

"When every dollar counts, this wage increase is a welcome boost for some of our lowest-paid Aboriginal and Torres Strait Islander workers," Ms Penehoe said.

"At the same time, it's important to recognise that this increase alone will not fully address the economic challenges many face, particularly those on income support or living in remote communities, where the cost of living remains high."

The wage increase could also seriously impact Aboriginal Community Controlled Organisations and Indigenous businesses.

"Many ACCOs operate on fixed funding arrangements that don't automatically adjust for wage rises," Ms Penehoe said.

"This puts pressure on these vital organisations to cover increased costs without additional resources, which is simply not sustainable."

Indigenous workers were strongly represented in sectors such as health, aged care, food services and community support, industries where minimum wage decisions have significant impact. Data from the 2021 Census revealed 17.4 per cent of Indigenous workers were employed in community and personal service roles, and 14.2 per cent as labourers, roles often linked to minimum wages.

The Alliance said the increase would benefit many in these sectors but those on income support payments would not.

"To truly support those doing it toughest, income support payments need to keep pace with wage growth, not just inflation," Ms Penehoe said.

"Without improvements in income support and stronger pathways into meaningful employment, there is a risk the gap will widen rather than close."

The Alliance said sustainable employment pathways for First Nations people required support and investment in wage subsidies, on-the-job training, social enterprises and Indigenous-led employment models, as well as culturally safe employment and transition support mechanisms.

"This is a positive step but First Nations organisations can't keep delivering more with less," Ms Penehoe said.

"We need responsive policy, flexible funding, and a system that genuinely shifts the dial on equity."

A nationwide target to increase employment of Indigenous people aged between 25 and 64 by 62 per cent by 2031 was supported by the federal government's $707 million funding announcement last year to create 3,000 jobs in remote communities.

The Australian Institute of Health and Welfare Employment reported the Commonwealth had aimed for a 67 per cent rise in jobs for Indigenous people aged 15-24 and a 62 per cent rise for those aged 25-64 by 2031.

A new Indigenous Skills and Employment Program would connect First Nations people to jobs, career advancement opportunities, training, and job-ready activities to help achieve the goals.

A report last October showed First Nations people had fallen further behind in the jobs market.

The Work Watch data by Workskil Australia, the nation's biggest not-for-profit employment services provider, showed total new hires among job seekers on welfare payments rose 0.9 per cent in the June 2024 quarter, but for First Nations people fell 4.6 per cent.

The drop in job placements for First Nations people was steepest within trades and services (down 14.4 per cent), hospitality and tourism (down 20.3 per cent) and agriculture, animals and conservation (down 56 per cent).