Download Minimum Wage Setting under Work choices

Minimum Wage Setting under
Work choices
Including options for equity
There is no Minimum Wage Case
The AIRC does not set minimum – or any
wage rates
------ except transitional employees i.e: those
employees covered by a federal industrial
instrument that are not employed within
corporate bodies. Maybe 120,000 max.
Fair Pay Commission
The AFPC has a wide statutory obligation
to establish and adjust pay levels and take
into account a number of considerations,
including anti-discrimination matters.
The extreme optimists’ view
There is a wide scope for the AFPC to
raise the living standards of the low paid.
The reality – What the AFPC is looking at
“In setting the minimum wage, the Commission
will consider:
1. The capacity for the unemployed and low
paid to obtain and remain in employment;
2. Employment and competitiveness across
the country;
3. Providing a safety net for the low paid; and
4. Providing minimum wages for junior
employees, those in training, and
employees with a disability to ensure those
employees are competitive in the labour
market.” - AFPC
S32 of WRA - AFPC’s wage-setting
parameters
 Criteria is not prescriptive.
 The AFPC is not excluded from taking into account other
considerations.
 Despite the complete lack of reference in the Act to considerations
of fairness including the fairness of any potential outcome. The
AFPC is not prohibited from considerations of fairness and equity.
Functions of the AFPC
 Section 22(a) requires that the AFPC conduct wage reviews and
s22(b) requires that the AFPC exercise its wage-setting powers as
necessary
 This includes the establishment and maintenance of key minimum
entitlements of employment or the Australian Fair Pay and
Conditions Standard as set out in s171 of the Act.
 The standard includes in s171 (a) basic rates of pay and casual
loadings. In determining basic rates of pay and casual loadings s177
requires that the AFPC must have regard to the recommendations of
the Award Review Taskforce
Adjustment of Federal Minimum Wages
 The Act provides for separate consideration of the Standard Federal
Minimum Wage (Standard FMW) and the Special Federal Minimum
Wage (Special FMW). Special Federal Minimum wages apply at the
discretion of the AFPC to juniors, those with a disability or trainees.
The Standard FMW applies to all other employees.
 Section 195 establishes that the Standard FMW is $12.75 per hour
and s196 states that the power to adjust the Standard FMW is
subject to sections 176, 177, 190, 191, 195(2) and 222.
Anti discrimination considerations
 222 of the Act requires the AFPC to take into account a number of
anti-discrimination considerations when exercising its powers
 -equal pay, pro-rata disability pay methods for employees with
disabilities; taking into account the Racial Discrimination Act 1975,
the Disability Discrimination Act 1992, the Sex Discrimination Act
2004, the Age Discrimination Act and the Family Responsibilities
Convention.
 Section 222(1)(e) also requires that the AFPC ensure that its
decisions not discriminate on a range of grounds. Section 222(2)
also ensures that these anti-discrimination considerations apply
when the AFPC establishes the Special FMW.
Capacity & competitiveness
Low paid workers in Australia are not
competing with low paid workers overseas
for employment. Nor should Australia
aspire to become a low wage nation.
There is no evidence that low paid workers
are at a competitive disadvantage due to
the rate of pay they receive
Are low paid workers pricing themselves
out of a job?
 No!
 The evidence is that jobs continue to grow in industries
with high rates of minimum wage dependency.
 Federal Government predicts that there will be continued
jobs growth in the industries upon which the AFPC’s
determinations will have the greatest impact.
 The DEWR predicts that more than half the new jobs
created over the next five years are expected to be in
four occupational groupings, three of which (retail
workers, clerical and health) have a high level of
minimum wage workers within them
Impact on economy
Increasing rates of pay for minimum wage
workers does not harm the economy. The
economy has continued to grow with low
to moderate inflation while real increases
in award rates have occurred.
Impact on collective bargaining
 Increases in the minimum wages have not
adversely affected the rate of workplace
bargaining. The level of workplace bargaining
continues to increase.
 a significant gap between minimum wages and
the outcomes from bargaining agreements and
therefore considerable incentive for employees
to seek collectively or individually arrangements
in excess of the minimum.
Big Dog eats Little Dog
Lack of bargaining power has been
accentuated with the dramatic and equal
changes to industrial laws.
Who are the low paid?
Pay setting
Incorporated
Businesses
Proportion
Award Reliant
19.9
Collective Agreement
30.3
41.9
Individual Agreement
Working Proprietors
All Pay Settings
7.9
100
•Source: ABS EEH May 2004 (unpublished)
Where are they employed?
 Most heavily concentrated in the following
industry sectors:
 Retail trade (22.6 per cent);
 Accommodation, cafes and restaurants (17.0 per
cent);
 Health and community services (15.5 per cent);
 Property and business services (13.7 per cent);
and
 Manufacturing (8.5 per cent).
Occupations
 The vast majority (99.7 per cent) of minimum
wage employees are employed in nonmanagerial occupations.
 Elementary (24.5 per cent) and Intermediate
(27.8 per cent) clerical, sales and service
workers comprise over half of all award only
employees.
 Labourers and related workers comprise 18.1
per cent with 10.8 per cent being Tradespersons
and related workers.
Characteristics Minimum Wage
Earners
Female 60.3
Junior 15.6
Part-time 59.0
Casual 46.5
Casual and Part-time42.4
Earnings
Min Wage
Collective
Agreement
Individual
Total
Agreement#
$425.64
$761.31
$853.76
#Does not include working proprietors
Source: EEH May 2004 - Unpublished
$730.12
But for Men & Women
Average Weekly Ordinary Time Earnings, Minimum Wage Workers
employed within Private Sector Incorporated Businesses. May 2004
All Employees
Male
$486.82
Female
$395.50
All Employed Total
$437.03
Adult Employees
Male
$531.26
Female
$439.77
Adult Employees Total
$482.46
Adult-Full-Time Employee
Male
$636.65
Female
$614.71
Adult Full-Time Total
$627.78
The Fair Pay Commission
Need not be Fair
Can – but is highly unlikely to address
equity issues