On 1 June 2018, the Expert Panel of the Fair Work Commission (FWC) handed down its Annual Wage Review 2017-18 Decision [2018] FWCFB 3500. Key elements of the decision include:

  • a 3.5 per cent minimum wage increase;
  • the National Minimum Wage will be increased to $719.20 per week or $18.93 per hour;
  • junior, apprentice and trainee wage rates will be adjusted proportionately; and
  • wage related allowances and expense related allowances will be increased in accordance with the usual formulas

The wage increase is operative from the first pay period that starts on or after 1 July 2018.

Ai Group played a major role in the Annual Wage Review including strong opposition to the ACTU’s claims.

On 13 March 2018, Ai Group filed its submission, a reply submission and a post-Budget submission in last year’s Annual Wage Review. On 16 May 2018, Ai Group appeared before the Expert Panel of the FWC on in the final consultations.

AI Group’s submission argued that a modest wage increase of 1.8 per cent was warranted. This equated to an increase of about $12.50 per week in the National Minimum Wage and about $14.60 per week at the base trade level. The submission argued that the FWC needed to take a cautious approach when determining the quantum of last year’s minimum wage increase as an excessive increase would reduce the job security of low paid workers and reduce employment opportunities for the unemployed and underemployed.

Despite some improvements in GDP and employment growth, national disposable income growth remains weak, and unemployment and underemployment rates continue to indicate considerable spare capacity. Businesses are under pressure. Steep energy price rises are proving difficult to pass on to customers and are squeezing margins across a wide range of industries. Also, productivity growth has been exceedingly weak over the past decade and over the current productivity growth cycle. Currently, background inflation in Australia is weak and this means that a smaller minimum wage increase will generate real wage increases for workers, including those in low wage jobs.

Ai Group’s submission pointed out that global competitiveness is a key risk for Australian businesses. Australia already has one of the highest national minimum wage rates in the world, and most Australian workers are entitled to award wage rates that are higher than the National Minimum Wage. The 3.3 per cent minimum wage increase awarded by the FWC last year was exceptionally high and out of step with economic factors. In its submission to the Annual Wage Review, the ACTU proposed a $50 per week or 7.2 per cent increase in the national minimum wage and award rates. In its media comments, Ai Group described the ACTU’s proposal, which is nearly four times the current rate of inflation, as job-destroying. Without doubt the ACTU’s claim would push our national minimum wage to the highest in the world.

If you would like more information about the Annual Wage Review, please contact Ai Group’s Workplace Advice Service on 1300 55 66 77.

Alternatively, if you would like advice about wage rates under enterprise agreements and employment contracts please contact your local employment, workplace and industrial lawyer in Sydney, Newcastle, Wollongong, Adelaide, Melbourne or Brisbane or email Ai Group Workplace Lawyers at info@aigroupworkplacelawyers.com.au.

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