On 1 June 2012 Fair Work Australia increased the minimum wage by 2.9%, to $606.40 a week — a rise of $17.10 from the previous $589.30.
The rise is less than the $26 a week the ACTU had called for but much more than the $9.40 the Australian Chamber of Commerce and Industry had wanted. The Australian Industry Group said the rise should be around $14.
The ACTU said it will help entrench a working poor in Australia, but the restaurant and catering body said FWA would be responsible for job losses as small businesses closed.
The rise will affect more than 1.3m workers whose pay is set by awards, and the FWA wage panel said it was not persuaded to grant any deferrals or exemptions.
‘In this review we have decided that the relevant statutory considerations favour a moderate increase, which will improve the real value of award wages and assist the living standards of the low paid,’ Fair Work president Justice Iain Ross said.
RETAIL AND HOSPITALITY NOT EXEMPTED
The Minimum Wage Panel decided not to exempt employers in retail and hospitality from the wage increase.
‘The evidence does not support a conclusion that, as a whole, these industries are suffering economic circumstances which would warrant an exemption from wage increases arising from our decision,’ the panel noted.
The panel said it took note of weaker employment conditions in the second half of last year and patchy economic growth, which had been slower than expected.
‘There are also conflicting signals in the main economic indicators and considerable volatility, from quarter to quarter, in important measures such as growth in company gross operating profits, inflation, hours worked and gross value added by industry,’ the panel said.
‘These considerations make it difficult to form a clear view of current and prospective economic performance. This uncertainty and the diversity of experience in the economy have been significant factors in our determination of the level of increase in minimum wages.’
NO COMPENSATION FOR CARBON TAX
The wages panel decided not to compensate workers for the additional costs of the carbon tax.
‘We conclude that we should not provide any additional assistance to compensate for the anticipated price effects associated with the introduction of a price on carbon,’ the panel said.
‘Compensation has already been provided through tax cuts and transfer payments and further compensation by minimum wage adjustments would amount to “double dipping”.’
Some employer groups had argued the wage rise should in fact be reduced because of the compensation being offered as part of the government’s carbon tax package.
The full bench of Fair Work said it had not been convinced by this argument.
‘Nor are we persuaded that the degree of “overcompensation” or “buffer” provided in the Household Assistance Package should be taken into account so as to reduce the level of increase that we would otherwise determine,’ the statement said.
Workplace Relations Minister Bill Shorten described the decision as ‘well balanced and moderate’, reflecting the underlying strength of the Australian economy in an uncertain global economic environment.
He said that under the Fair Work Act 2009, the National Minimum Wage has increased 4.1% in real terms.
AI GROUP — ‘RISKS’
Innes Willox, chief executive of the Australian Industry Group said the decision was ‘not without risks’.
‘The cost to employers will be about 20% higher after on-costs such as superannuation, workers compensation and payroll tax are added,’ he said.
‘FWA’s decision to grant a wage rise that is significantly higher than current productivity growth rates will push Australia’s already relatively high unit labour costs even further above our international competitors.’
ACTU — MINIMUM WAGES WILL ‘FALL FURTHER BEHIND’
‘The ACTU said the decision will see those on minimum wages fall further behind the rest of the workforce and risks entrenching a working poor in Australia.
ACTU secretary Dave Oliver said it overlooked the fact that low-paid workers had continually fallen behind average wage earners in recent years.
‘This is a very disappointing decision that means the one-in-six workers who are dependent on award rates of pay will barely keep pace with the cost of living, let alone the rest of the workforce,’ he said.
‘Over the past half-a-decade the incomes of the 1.4 million workers who depend on award wages have virtually stood still, after inflation is taken into account.’
‘Average wages have grown by more than 10 times the rate of minimum wages since 2005.’
HOSPITALITY INDUSTRY — TWO-SPEED ECONOMY
Restaurant & Catering Australia chief executive officer John Hart said the decision fails to accept that there is a two-speed economy in Australia and will have a further debilitating impact on sectors that are not benefiting from the resources boom.
Hart said the panel this year did not even bother to conduct regional consultations ‘which indicates they are not interested in the commercial viability of small businesses’.
‘The panel will now need to accept that each and every small business that fails in the next financial year as a result of excessive labour costs will be traced back to the illegitimacy of this decision today,’ he said.
Opposition Leader Tony Abbott welcomed the wage rise, saying: ‘I certainly don’t begrudge people a pay rise, let’s face it they’re about to be hit with the carbon tax.’
United Voice, one of Australia’s largest unions, described the decision as ‘underwhelming’.
Sue Lines, United Voice assistant national secretary, said the decision means that millions of low-paid workers get a pay rise that barely keeps pace with inflation.
‘A $17.10 per week increase will do little to redress the ongoing decline in the spending power of low paid workers which remains an ugly legacy of the Coalition’s WorkChoices,’ she said.
Claire Harrison is the Founder and Managing Director of Harrisons, a flourishing HR consulting business that sprouted in 2009 from Claire’s passionate belief that inspiring leaders and superstar employees are the key success factor to any business. With over 20 years’ experience, Claire has worked as a HR Director of multi-national organisations, as a Non-Executive Board Director, and a small business owner. Claire’s corporate career includes working with companies such as BHP, Westpac, Fonterra and Mayne Nickless.
