Updated: Nov 6, 2020
Due to the Fair Work Act 2009 (Cth) requires the formation of the Commission made up of the Expert Panel for annual wage reviews. They aim to conduct a complete review of national minimum wage (NMW) for each financial year. They are given the power to set, vary or revoke modern award minimum wages (which are minimum wages contained in modern awards). This year’s review was broadcasted on 19 June 2020.
Because of the health crisis precipitated by the COVID-19 virus and efforts to contain it as well as the bushfires experienced earlier in the year, the Australian economy is experiencing a significant downturn. Experts say that it is almost certain that it will enter a technical recession.
However, it has caused an “unprecedented” shock to the labour market. Unemployment and underemployment have both risen significantly.
The majority noted that “it is generally accepted that the pathway to recovery is largely dependent on how well the spread of the virus is contained”. The pace of recovery beyond the June quarter of 2020 is uncertain.
However, while the impact of COVID-19 was felt across the economy, the extent of its effects were inconsistent across different sectors.
The decline in total jobs can be separated into three clusters: Cluster 1 - ↓ 29.1% accommodation and food services ↓ 25.3% arts and recreation services Cluster 2 - ↓ 10.5% information media and telecommunications ↓ 4.0% manufacturing Cluster 3 - ↑ 0.4% electricity, gas, water and waste services ↑ 0.5% finance and insurance services
ACCI, Ai Group and other employee organisations submitted that there should be no increase in the NMW: “more weight [was] given to potential effect of increasing minimum wages on hiring and reemployment” and “in a recession, when aggregate demand is weak, the employment effects of increases in minimum wages are likely to be more significant and the capacity of employers to absorb wage increases or to pass them on to consumers in the form of higher prices is more limited.”
The majority’s conclusion was in favour of greater moderation, not only with economic considerations but also “relative living standards” and the “needs of the low paid”.
The majority decided that it was appropriate to increase NMW: “we acknowledge that any increase we award which is less than increases in prices and living costs would amount to areal wage cut. Such an outcome would mean that many award-reliant employees, particularly low-paid employees, would be less able to meet their needs. For some households such an outcome would lead to further disadvantage and may place them at greater risk of moving into poverty…”
Finally, the decision to award an increase of 1.75% was reached. The NMW was equal to $ 753.80/week (increase of $13.00), or $ 19.84/hour (35 cents).
ACCI submitted that if the increase were to be awarded, it should not be operative before 1 January 2021. Ai Group submitted that it should operate after 1 January 2021.
However, the majority concluded that: “in this regard it is important to note the terms of s.286(2): If the FWC is satisfied that there are exceptional circumstances justifying why a variation determination should not come into operation until a later day, the FWC may specify that later day as the day on which it comes into operation. However, the determination must be limited just to the particular situation to which the exceptional circumstances relate.”
The majority was not satisfied that there are “exceptional circumstances” that will justify adjustments set by a NMW order taking place later than 1 July 2020.
The awards are to be set out in 3 groups: Group 1 - industries or sectors that have been less affected by the pandemic and modern awards applying to frontline healthcare and social assistance workers and employees engaged in essential services; awards have come into operation on 1 July 2020. Group 2 - industries that were affected by the pandemic but not as badly as group 3; awards will come into operation on 1 November 2020. Group 3 - the most adversely affected sectors: accommodation and food services, art and recreation services, aviation, retail trade, and tourism; will come into operation on 1 February 2021.