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 capacitycapacity for the unemployed and low paid to obtain and remain in employment;

2. Employment and competitivenesscompetitiveness across the country;

3. Providing a safety net for the low paid; and4. Providing minimum wages for junior

employees, those in training, and employees with a disability to ensure those employees are competitive 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 Award Reliant 19.9 Collective Agreement 30.3 Individual Agreement 41.9 Working Proprietors 7.9 All Pay Settings 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 non-managerial 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 Agreement#

Total

$425.64 $761.31 $853.76 $730.12

#Does not include working proprietorsSource: EEH May 2004 - Unpublished

But for Men & Women

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

Average Weekly Ordinary Time Earnings, Minimum Wage Workers employed within Private Sector Incorporated Businesses. May 2004

The Fair Pay Commission

Need not be FairCan – but is highly unlikely to address

equity issues