Fair Work lift wages 3.75 per cent for lowest paid workers

Australian Community Media

About one in five Australian workers, or 2.6 million people, will be affected by the changes from July 1, 2024.

Transcript

00:00 Our decision today is to increase the national minimum wage and all modern award minimum

00:07 wage rates by 3.75% effective from 1 July 2024.

00:15 We are announcing today the decision we have reached in this year's annual wage review.

00:21 The annual wage review is conducted in accordance with section 285 of the Fair Work Act which

00:27 requires the Fair Work Commission to undertake two tasks.

00:31 The first task is to review and make the national minimum wage order.

00:37 The only function of the national minimum wage is to set a minimum rate of pay for employees

00:43 in the national industrial relations system who are not covered by a modern award or an

00:49 enterprise agreement.

00:51 Only a very small number of employees are actually paid the national minimum wage and

00:56 will be affected by this decision.

00:59 The second task is to review modern award minimum wages.

01:05 This is the most important aspect of the review.

01:09 There are 121 modern awards which apply to employees in the national industrial relations

01:15 system in various industries and occupations.

01:19 There is also a small number of modern enterprise awards which apply to specific business enterprises.

01:26 Each modern award sets minimum wage rates for employees working in the industries, occupations

01:33 or enterprises covered by the award.

01:37 In setting modern award rates of pay, the Commission is required to take into account

01:42 the amount of the national minimum wage.

01:46 Approximately 20.7% of the Australian workforce, or about 2.6 million employees, are paid in

01:54 accordance with minimum wage rates in modern awards.

01:58 They and their employers are therefore directly affected by this decision.

02:03 In addition, there are some categories of employees who are indirectly affected by way

02:08 of the review outcomes being flowed on by various means.

02:13 Our estimate is therefore that this decision will operate upon the wages of about one quarter

02:18 of all Australian employees.

02:22 The characteristics of employees who rely on modern award minimum wage rates, and are

02:27 therefore directly affected by our decision, are significantly different to the workforce

02:32 as a whole.

02:34 They mostly work part-time hours, are predominantly women, and almost half are casual employees.

02:42 They are also much more likely to be low paid.

02:46 Because of these characteristics, the broader economic effect of annual wage review decisions

02:52 is limited.

02:54 The total wages cost of the modern award-reliant workforce constitutes less than 11% of the

03:01 national wage bill.

03:03 Furthermore, the effect of the review decision across the economy is not uniform.

03:09 About two-thirds of all modern award-reliant employees are employed in only four industry

03:15 sectors.

03:17 Other industry sectors have negligible numbers of modern award-reliant employees.

03:23 The Fair Work Act requires us to take into account specific considerations in conducting

03:28 the annual wage review.

03:30 These include relative living standards, the needs of the low paid, workforce participation,

03:38 the performance and competitiveness of the national economy, and the need to achieve

03:43 gender equality.

03:45 We have taken all of these considerations into account.

03:49 In conducting the review, we have received submissions from a range of stakeholders,

03:56 including the Australian Chamber of Commerce and Industry, the Australian Council of Trade

04:00 Unions, the Australian Industry Group, the Council of Small Business Organisations Australia,

04:08 as well as various other employer and employee organisations, and the Australian Government

04:13 and state governments.

04:16 A number of parties have advanced specific proposals for wage adjustments to be made

04:21 in the review, and these are set out in the appendix to our written decision.

04:25 However, we make clear that the annual wage review process is not one of adjudication

04:31 between competing proposals.

04:34 While we have obviously taken the submissions made into account, our statutory task is to

04:39 make our own assessment as to what constitutes a safety net of fair minimum wages.

04:48 Our decision today is to increase the national minimum wage and all modern award minimum

04:55 wage rates by 3.75 per cent, effective from 1 July 2024.

05:05 In determining this level of increase, a primary consideration has been the cost of living

05:10 pressures that modern award-reliant employees, particularly those who are low-paid and live

05:14 in low-income households, continue to experience.

05:19 This is notwithstanding that inflation is considerably lower than it was at the time

05:23 of last year's review.

05:26 Modern award minimum wages remain, in real terms, lower than they were five years ago,

05:32 notwithstanding last year's increase of 5.75 per cent.

05:37 Employee households reliant on award wages are undergoing financial stress as a result.

05:44 This has militated against this review resulting in any further reduction in real award wage

05:49 rates.

05:50 However, we also consider that it is not appropriate at this time to increase award wages by any

05:57 amount significantly above the inflation rate.

06:02 This is principally because labour productivity is no higher than it was four years ago, and

06:08 productivity growth has only recently returned to positive territory.

06:12 We have taken into account that the labour market and business profit growth overall

06:17 remain strong, however the position is less positive in some of the industry sectors which

06:23 contain a large proportion of modern award-reliant employees.

06:29 We have also taken into account that modern award-reliant employees will shortly receive

06:34 the benefit of the Stage 3 tax cuts and the Budget cost of living measures, which are

06:39 projected to increase real household disposable incomes over the next 12 months.

06:47 We have treated the forthcoming increase to the superannuation guarantee contribution

06:51 amount as a moderating factor.

06:55 The increase of 3.75 per cent which we have determined is broadly in line with forecast

07:01 wages growth across the economy in 2024, and will only make a modest contribution to the

07:07 total amount of wages growth this year.

07:11 We consider therefore that this increase is consistent with the forecast return of the

07:17 inflation rate to below 3 per cent in 2025.

07:23 We have also determined to establish a program for the timely resolution of gender undervaluation

07:30 issues arising in respect of certain modern awards.

07:35 A gender equity research project, which was undertaken as a result of the decision in

07:41 last year's review, has now been completed.

07:45 This has permitted us to identify priority areas for attention.

07:51 We have decided that modern awards and classifications applicable to early childhood education and

07:59 care workers, disability home care workers and other social and community services workers,

08:07 dental assistants, medical technicians, psychologists and other health professionals and pharmacists

08:15 will be the subject of commission initiated proceedings to examine and address gender

08:21 undervaluation.

08:24 These proceedings will commence shortly after the issue of this decision and we intend that

08:30 they will be completed by the time of next year's review, which will then move on to

08:36 the consideration of other gender undervaluation issues.

08:41 We conclude by thanking all parties that participated in the annual wage review process and we thank

08:48 them for their contributions.

08:51 We also thank the staff of the commission for their assistance and we now adjourn.

08:56 [BLANK_AUDIO]

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