Annual Wage Review Decision - 3% Increase to Award Wages

4th June 2014

The Fair Work Commission today decided to increase all minimum award wages by 3% effective from the first pay period on or immediately after, 1 July 2014. The National Minimum Wage (NMW) will increase to $640.90 per week and $16.87 per hour for non-award employees. The increases may be absorbed in over-award wages and salaries unless there is an express agreement to pass on the increase to employees.

The cost of employing staff paid on award minimum wages will increase by 3.25% as a result of the decision and the scheduled increase to superannuation contributions on 1 July 2014.

The President of the Fair Work Commission, Justice Ian Ross AO, annouced the decision today via video link emphasising the deterioration in relative living standards for award reliant employees, historically low unit labour costs, the desire to maintain the real value of award wages, and in the expert panel’s view, the absence of any sign of cost pressures arising from the labour market. The President made it clear that the Commission would have granted a higher increase had the Superannuation Guarantee adjustment of 0.25% scheduled for 1 July this year not been included.

The Commission did not take into account the proposed repeal of the existing carbon price arrangements or the proposed changes to the tax-transfer system announced in the 2014–15 Commonwealth Budget. It also rejected the view that differential treatment in respect of certain modern awards and industries. The Commision was of the opinion that the evidence does not support a conclusion that industry circumstances are such that would warrant the differential treatment sought.

This is a controversial decision insofar as the Commission has stated its attitude to it’s statutory responsibility is to perform a role in ameliorating inequality. On its own this is not particularly radical, however the Commission claims as a matter of fact that the distribution of earnings has become more unequal in Australia over recent decades. This is an interesting perspective as the comparison of earnings of the lowest paid in the Manufacturing and Associated Industries and Occupations Award with increases in Average Weekly Ordinary Time Earnings, changes in the Wage Price Index and Annualised Average Weekly Income in enterprise agreements doesn’t show the many valid reasons for the gap and therefore it is a huge leap to claim inequality, let alone put forward this as the basis of the decision to increase all award wages.

You can view the decision via the Commission’s video link or alternatively download the full decision..

If you have any questions or would like advice on implementing the increases please contact me..