Today, The Fair Work Commission (‘FWC’) delivered its Annual Wage Review decision. The decision is to provide an increase of 1.75% to minimum wage rates, which is substantially lower than last year’s 3%. The new minimum annual wage will be $753.80 per week or $19.84 per hour, an increase of $13.00 per week.
The Annual Wage Review affects more than 2 million workers because of its flow-on effect to Award rates.
Whilst all wage review decisions are eagerly anticipated, this year’s decision carries particular interest given the impact on employment during the COVID-19 pandemic. For example, for the first time in 30 years, AI Group submitted that there should be no increase to the minimum wage claiming it would not be in anyone’s interests and would ultimately disadvantage low-skilled workers who had lost their jobs during the COVID-19 pandemic.
Reasons
Part of the rationale for a substantially lower increase than previous years was the marked change in the economic environment and the tax-transfer system, as well as other changes, which have taken effect during the current Review period which have benefitted low-paid households.
In its reasons, the Commission stated:
“The Australian economy is going through a significant downturn and is almost certain to enter a technical recession upon the release of the June quarter ABS National Accounts, the first in almost 30 years. It has been caused by an unprecedented health crisis and the impact of government measures to prevent the spread of the COVID-19 virus. There was also some indication of slowing in the economy before the pandemic, as a result of the bushfires experienced in parts of Australia”
In respect to the impact of COVID-19 on the labour market, the Commission noted that the shock to the labour market is unprecedented. The latest data, for May 2020, show that the unemployment rate increased by 1.9 percentage points in 2 months, to 7.1 per cent. The participation rate declined by 3.1 percentage points in 2 months, highlighting the fact that many people left the labour force. But for the decline in the participation rate, the unemployment rate would have been higher.
The Commission acknowledged that the unemployment rate did not increase further because many people are still defined as “employed”, in part because of the JobKeeper payment, and the unemployment rate is likely to increase further as the JobKeeper payment unwinds. Given this, the underemployment rate becomes the more relevant labour market indicator.
The Commission rejected increasing the rates by the amount suggested by the ACTU, among others, stating that such an increase would pose a real risk of dis-employment and of adversely affecting the employment opportunities of low-skilled and young workers.
It went on to acknowledge that “any increase we award which is less than increases in prices and living costs would amount to a real wage cut.” Consequently, in the current circumstances, this may result in many award-reliant employees being less able to meet their needs, increasing the risk of some households falling into poverty.
Commencement
Critically, the increases will take effect for different Awards on different dates. They do not all apply from 1 July as is the usual standard.
The increases will take effect on the following dates:
- Group 1 Awards: 1 July 2020
- Group 2 Awards: 1 November 2020
- Group 3 Awards: 1 February 2021
Group 1 Awards include:
- Aboriginal Community Controlled Health Services Award 2020;
- Aged Care Award 2010;
- Ambulance and Patient Transport Industry Award 2020;
- Banking, Finance and Insurance Award 2020;
- Cemetery Industry Award 2020;
- Children’s Services Award 2010;
- Cleaning Services Award 2020;
- Corrections and Detention (Private Sector) Award 2020;
- Educational Services (Schools) General Staff Award 2020;
- Educational Services (Teachers) Award 2010;
- Electrical Power Industry Award 2020;
- Fire Fighting Industry Award 2020;
- Funeral Industry Award 2010;
- Gas Industry Award 2020;
- Health Professionals and Support Services Award 2020;
- Medical Practitioners Award 2020;
- Nurses Award 2010;
- Pharmacy Industry Award 2020;
- Social, Community, Home Care and Disability Services Industry Award 2010;
- State Government Agencies Award 2020; and
- Water Industry Award 2020.
Group 2 Awards include:
- Aluminium Industry Award 2020;
- Animal Care and Veterinary Services Award 2020;
- Aquaculture Industry Award 2020;
- Architects Award 2020;
- Asphalt Industry Award 2020;
- Australian Government Industry Award 2016;
- Black Coal Mining Industry Award 2010;
- Book Industry Award 2020;
- Broadcasting, Recorded Entertainment and Cinemas Award 2010;
- Building and Construction General On-site Award 2010;
- Business Equipment Award 2020;
- Car Parking Award 2020;
- Cement, Lime and Quarrying Award 2020;
- Clerks—Private Sector Award 2020;
- Coal Export Terminals Award 2020;
- Concrete Products Award 2020;
- Contract Call Centres Award 2020;
- Cotton Ginning Award 2020;
- Dredging Industry Award 2020;
- Educational Services (Post-Secondary Education) Award 2020;
- Electrical, Electronic and Communications Contracting Award 2010;
- Food, Beverage and Tobacco Manufacturing Award 2010;
- Gardening and Landscaping Services Award 2020;
- Graphic Arts, Printing and Publishing Award 2010;
- Higher Education Industry-Academic Staff-Award 2020;
- Higher Education Industry-General Staff-Award 2020;
- Horticulture Award 2010;
- Hydrocarbons Field Geologists Award 2020;
- Hydrocarbons Industry (Upstream) Award 2020;
- Joinery and Building Trades Award 2010;
- Journalists Published Media Award 2020;
- Labour Market Assistance Industry Award 2020;
- Legal Services Award 2020;
- Local Government Industry Award 2020;
- Manufacturing and Associated Industries and Occupations Award 2020;
- Marine Towage Award 2020;
- Maritime Offshore Oil and Gas Award 2020;
- Market and Social Research Award 2020;
- Meat Industry Award 2020;
- Mining Industry Award 2020;
- Miscellaneous Award 2020;
- Mobile Crane Hiring Award 2010;
- Oil Refining and Manufacturing Award 2020;
- Passenger Vehicle Transportation Award 2020;
- Pastoral Award 2010;
- Pest Control Industry Award 2020;
- Pharmaceutical Industry Award 2010;
- Plumbing and Fire Sprinklers Award 2010;
- Port Authorities Award 2020;
- Ports, Harbours and Enclosed Water Vessels Award 2020;
- Poultry Processing Award 2020;
- Premixed Concrete Award 2020;
- Professional Diving Industry (Industrial) Award 2020;
- Professional Employees Award 2020;
- Rail Industry Award 2020;
- Real Estate Industry Award 2020;
- Road Transport (Long Distance Operations) Award 2020;
- Road Transport and Distribution Award 2020;
- Salt Industry Award 2010;
- Seafood Processing Award 2020;
- Seagoing Industry Award 2020;
- Security Services Industry Award 2020;
- Silviculture Award 2020;
- Stevedoring Industry Award 2020;
- Storage Services and Wholesale Award 2020;
- Sugar Industry Award 2020;
- Supported Employment Services Award 2020;
- Surveying Award 2020;
- Telecommunications Services Award 2010;
- Textile, Clothing, Footwear and Associated Industries Award 2010;
- Timber Industry Award 2010;
- Transport (Cash in Transit) Award 2020;
- Waste Management Award 2020; and
- Wool Storage, Sampling and Testing Award 2010.
Group 3 Awards include:
- Air Pilots Award 2020;
- Aircraft Cabin Crew Award 2020;
- Airline Operations-Ground Staff award 2020;
- Airport Employees Award 2020;
- Alpine Resorts Award 2020;
- Amusement, Events and Recreation Award 2020;
- Commercial Sales Award 2020;
- Dry Cleaning and Laundry Industry Award 2020;
- Fast Food Industry Award 2010;
- Fitness Industry Award 2010;
- General Retail Industry Award 2010;
- Hair and Beauty Industry Award 2010;
- Horse and Greyhound Training Award 2020;
- Hospitality Industry (General) Award 2020;
- Live Performance Award 2010;
- Mannequins and Models Award 2020
- Marine Tourism and Charter Vessels Award 2020;
- Nursery Award 2020;
- Professional Diving Industry (Recreational) Award 2020;
- Racing Clubs Events Award 2010;
- Racing Industry Ground Maintenance Award 2020;
- Registered and Licensed Clubs Award 2010;
- Restaurant Industry Award 2020;
- Sporting Organisations Award 2020;
- Travelling Shows Award 2020; and
- Vehicle Repair, Services and Retail Award 2020.
The full decision is now available on the FWC website. The FWC and Fair Work Ombudsman will update the wage tables found in Awards and on their websites for the relevant Awards in preparation for the respective commencements.
Should you have any questions regarding the Annual Wage Review or any Award payments, please contact Adam Crichton on 8414 3441.