On
30 May 2022 the Australian Fair
Work Commission issued a statement in response to the
Albanese Labor Government seeking to make a new submission of
the Annual Wage Review 2021–22.
[2022]
FWCFB 84
STATEMENT
Fair
Work Act 2009
s.285—Annual
wage reviews to be conducted
Annual
Wage Review 2021–22
(C2022/1)
JUSTICE
ROSS, PRESIDENT
VICE
PRESIDENT CATANZARITI
DEPUTY
PRESIDENT ASBURY
COMMISSIONER
HAMPTON
MR
FERGUSON
PROFESSOR
WOODEN
MS
LABINE-ROMAIN MELBOURNE 30 MAY 2022
AMENDED
TIMETABLE
[1]
The current timetable for 2021-22 Annual Wage Review provides that
parties are to lodge submissions on the National Accounts March
quarter 2022 by Friday 3 June 2022 and submissions in reply are to be
lodged by Tuesday 7 June 2022.
[2]
On Friday 27 May 2022 the President received correspondence from the
Prime Minister seeking leave to make a new Australian Government
submission to the 2021-22 Annual Wage Review. The correspondence
states that the new submission will outline the Government’s
position ‘on a fair increase to minimum and award wages for
Australia’s lowest paid workers, noting the rising costs of
living’.
[3]
Section 289(1) of the Fair Work Act 2009 (Cth) (the Act) requires the
Commission to ensure that all persons and bodies have a reasonable
opportunity to make submissions to the 2021-22 Annual Wage Review. We
note that from 11 April 2022 until recently, the Australian
Government was in caretaker mode.
[4]
A key consideration in responding to the request is the statutory
constraints on the conduct of annual wage reviews. In particular,
s.285(1) of the Act requires the Commission to‘conduct and complete
an annual wage review in each financial year’. It follows that 30
June 2022 is the outer limit for completion of the 2021-22 Review. As
a practical matter, our decision must be published some time before
30 June to allow sufficient time for draft award variation
determinations to be published and for interested parties to submit
corrections or other amendments to the draft determinations.
[5]
In the course of the public consultations on 18 May 2022 the
Australian Chamber of Commerce and Industry and others foreshadowed
that they would seek an opportunity to respond in the event the
Australian Government Government made a further substantive
submission.1
[6]
We grant leave for the Australian Government to make a new
submission.
[7]
The statutory deadline and requirement to provide interested parties
with an opportunity to make comments on such a submission impose some
practical constraints on the timing and length of the new submission.
[8]
Accordingly, the timetable for the 2021-22 Annual Wage Review is
varied as follows:
1.
The Australian Government may lodge a new submission to the Review by
no later than 4pm (AEST) on Friday 3 June 2022. The submission is to
be no longer than 10 A4 pages.
2.
Interested parties may lodge submissions in reply by no later than
4pm (AEST) on Wednesday 8 June 2022.
3.
Reply submissions regarding the National Accounts March quarter 2022
may be lodged by no later than 4pm (AEST) on Wednesday 8 June 2022.
4.
Parties have liberty to apply.
PRESIDENT
Printed
by authority of the Commonwealth Government Printer
<PR742109>
~~~~~~~~~~~~~~~~~~~~~~~
The
Fair Work Commission have granted permission for a new submission the
Albanese Government lodged an 6 page 29 point document three days
later, pressing the case for a further increase in the minimum wage,
pointing out that high and rising inflation and falling real wages
are creating cost-of-living pressures, particularly for Australia’s
low-paid workers.
New
Australian Government Submission to the Fair Work Commission
Annual
Wage Review 2022, 3 June 2022:
1
Executive Summary
1.
The Government thanks the Fair Work Commission’s Expert Panel
conducting the Annual Wage Review (‘the Panel’) for the
opportunity to make a submission. In this submission, the Government
provides updated evidence on the economy, labour market, and low-paid
workers to assist the Panel in making its decision.
2.
Given the highly unusual and challenging economic conditions, the
Government is making a recommendation to the Fair Work Commission in
relation to this year’s wage decision.
3.
The new Government has a different view on the Annual Wage Review to
the previous Government. In particular, the direction of the previous
Government’s submission headed “The importance of low-paid work”
does not reflect the priorities of this Government.
4.
High and rising inflation and falling real wages are creating
cost-of-living pressures, particularly for Australia’s low-paid
workers. Economic conditions are particularly challenging given
inflation is at a 21-year high of 5.1 per cent and is expected to
increase further in the near-term due to persistent and compounding
supply shocks. The current inflation rate is 2.7 percentage points
higher than wages growth as measured by the Wage Price Index (WPI),
which means on average, Australians are experiencing the sharpest
decline in real wages in 21 years. The National Accounts results
released this week provide further evidence of the broad-based
domestic price pressures which were clear in the Consumer Price Index
(CPI) release for the March quarter 2022.
5.
In considering its decision on wages for this year, the
Government recommends that the Fair Work Commission ensures that the
real wages of Australia’s low-paid workers do not go backwards.
6.
High and rising inflation and weak wages growth are reducing real
wages across the economy and creating cost-of-living pressures for
low-paid workers. It is critical to ensure that these workers do not
bear a disproportionate impact of these challenging conditions.
7.
The new Government does not want to see Australian workers go
backwards; in particular, those workers on low rates of pay who are
experiencing the worst impacts of inflation and have the least
capacity to draw on savings.
8.
The Government notes that over the past decade, in 9 out of 10 years,
the Panel has increased the minimum wage rate in line with, or above,
inflation. The largest increase in recent years was in 2018-19 where
a 3.5 per cent increase was ordered, when inflation was only 1.9 per
cent. This submission does not suggest that inflation should be the
only consideration when determining wages.
9.
This submission does not suggest that across-the-board, wages should
automatically increase in line with inflation. The key driver of real
wage growth (excluding inflation) over the longer-term is labour
productivity. The current economic circumstances are highly unusual
and challenging, and the Government’s submission pertains
specifically to the low-paid and in the current macroeconomic
context.
10.
Australia’s low-paid workers, many of whom are young, female and in
casual employment, are far more likely than higher paid workers to
find themselves experiencing financial hardship. Many of these
workers made significant contributions in the provision of essential
services during COVID-19.
11.
Maintaining the relative standard of living of low-paid workers is
not expected to have a material impact on employment.
12.
Ensuring that real wages for low-paid workers do not go backwards in
these circumstances will protect the relative living standards for
these workers, prevent further financial hardship and avoid adverse
distributional outcomes and broader economic and social risks.
13.
This submission is one of the important first steps in the
Government’s plans to address the impacts of the skyrocketing costs
of living for Australian workers and families. It is part of the
Government’s broader economic plan, calibrated to address inflation
by driving productivity growth and expanding the capacity of the
economy to alleviate supply side pressures. The Government will do
this through investments in cleaner and cheaper energy, in a
better-trained workforce with higher participation and in the care
economy, digital economy and a future made in Australia.
2
Economy and labour market update…..
14.
Over the past 12 months, global and domestic inflationary pressures
have significantly increased. These pressures are now expected to be
stronger and more persistent, due to compounding global supply
shocks. The war in Ukraine and China’s COVID-19 outbreak are
exacerbating existing strains in global supply chains and
significantly driving up global energy and food prices.
15.
Domestic headline consumer price inflation increased by 5.1 per cent
through the year to the March quarter of 2022, the fastest increase
in 21 years. The trimmed mean measure of core inflation also picked
up to 3.7 per cent through the year to the March quarter, the highest
increase since early 2009. Inflationary pressures have begun to
broaden, with prices increasing in 80 per cent of the inflation
components in the March quarter.
16.
The Reserve Bank of Australia’s (RBA) May 2022 Statement on
Monetary Policy now forecasts that inflation will peak at around 6
per cent in the second half of 2022.
17.
While some external inflationary pressures, such as international
shipping costs, appear to have peaked, they remain elevated and other
inflationary pressures are increasing. The COVID-19 outbreak and
major city lockdowns in China present a significant upside risk to
imported goods prices. Domestically, higher wholesale electricity
prices could add further pressure to retail electricity prices and
headline inflation.
18.
Higher inflation is now expected to persist throughout 2022 and into
2023. If, as currently expected, global supply chain pressures
dissipate, oil prices moderate and consumption patterns return to a
more normal balance between goods and services, headline inflation
would be expected to ease over the course of 2023.
19.
Wages as measured by the WPI grew by 2.4 per cent through the year to
the March quarter. With inflation at 5.1 per cent, this means that on
average, real wages have seen the sharpest decline in 21 years. The
Government notes that this fall in real wages follows persistently
and historically low real wages growth over the past decade.
20.
While the Government welcomes recent falls in the unemployment rate,
it notes that this has not yet been associated with broad-based wages
growth. Assuming global supply factors driving up inflation dissipate
as expected, nominal wages growth is expected to begin outpacing
inflation.
21.
The RBA’s May 2022 Statement on Monetary Policy forecast the WPI to
grow by 3.3 per cent through the year to the June quarter 2023 and
by 3.7 per cent through the year to the June quarter 2024.
22.
The stronger than expected rise in inflation has seen consumer prices
outpace wages to date, resulting in larger near-term declines in real
wages. The near-term pick-up in inflation creates particularly acute
cost-of-living pressures on the low-paid.
23.
There are also significant economic risks associated with falling
real wages. Most notably, reduced capacity to spend could weigh on
household consumption with flow-on effects to aggregate demand more
broadly.
24.
While higher inflation and the anticipated tightening of monetary
policy may dampen activity, it is not expected to lead to a
substantial increase in the unemployment rate or a deterioration in
economic growth.
25.
The current economic circumstances are complex and substantial risks
remain, including the possibility of more significant and sustained
price pressures, or a more substantial slowing in activity.
3
Low-paid workers and the cost of living…..
26.
The current cost-of-living pressures will have a disproportionate
impact on low-paid workers.
27.
Recent inflationary pressures have been stronger for
non-discretionary goods and services, which increased by 6.6 per cent
through the year to the March quarter of 2022. Fuel, food and new
dwellings contributed nearly 3 percentage points to headline
inflation, with fuel rising by 35 per cent in the past 12 months.
28.
Low-paid workers have a diverse range of characteristics. In 2020,
low-paid workers were more likely to be female, employed on a casual
basis and under 30 years of age. Given this, a more substantial
increase for those on low wages would be beneficial in assisting to
narrow the gender pay gap.
29.
With growth in the WPI expected to strengthen over the forecast
period, supporting a more substantial increase for low-paid workers
will also help maintain relative living standards for the low-paid.
The
National Retail Association, Australian Industry Group,
Australian Chamber of Commerce and Industry, Australian
Business Industrial and NSW Business Chamber Ltd have taken up
the Commissioners' invitation to make new submissions of their own. Which
unsurprisingly a not in favour of the new federal government
submission, and indeed would like any rise in the minimum wage as applied to specific award classifications pushed
back to November 2022. Details can be found at:
https://www.fwc.gov.au/hearings-decisions/major-cases/annual-wage-reviews/annual-wage-review-2021-22/submissions-annual
