By John Salter
The Fair Work Commission President Justice Iain Ross handed down the commission’s annual judgement recently on what will be minimum pay rates in Australia for the financial year commencing 1 July 2017- and it seems no one is happy with the result. The Commission is required to conduct the annual review and does so in lengthy hearings which usually start at the end of each calendar year, culminating in an outcome in June. It is always presented with a mountain of economic research and data but in the end it is invariably asked to balance the economic interest of the nation and particularly the impact of any decision on unemployment rates with the capacity of the lowest paid people in the land to exist at or above the poverty line- and it is rare indeed for any commentator to indicate that they got it just right!!!
Employer bodies, who sought a modest $8 to $10 per week increase are clearly shocked by the decision which awards an amount well in excess of that and are claiming the effects on unemployment will be significant, particularly placing undue pressure on margins of small business employers such as retailers. The ACTU which sought a $45 per week increase at the lower levels of Award classifications and an even higher increases above that, appears to be equally critical, citing an extract from the decision which openly admits that the $22 increase is unlikely to allow single households reliant on base award wages to keep their heads above the poverty line.
And there is an ever increasing number of workers who are becoming Award reliant for their employment conditions- since 2014 this has grown very quickly from about 19% to nearly 23% of the Australian workforce , whilst those covered by EBA’s have dropped from nearly 42% to about 36%. These figures align with other evidence of wage growth stagnating in Australia, some would say to a concerning degree.
The other thing to note of course, is that the increase applies to all minimum rates of pay in the 122 industrial and occupational Awards which uniquely underpin the Australian labour market and form the benchmark for the BOOT test against which new EBA’s are assessed. So employers currently or about to begin bargaining have just had their baseline significantly increased, often magnified by a compounding effect of casual loading and penalty rates within those Awards- a feature of the system which has become even more notorious given recent controversial FWC decisions to install phased reductions in hospitality and retail week end penalty rates and to retrospectively can the Australia wide Coles EBA which covered 77,000 employees!
With challenges seeming to endlessly emerge in the space of setting employees pay rates and conditions, surely something has to give and substantial reform, as unpalatable as it seems politically, is surely not far away.
To view full details of today’s Fair Work Commission judgement, please click here.