Fair Work Commission awards wage rise, but says inequality increasing

AUSTRALIA’S 1.5 million lowest paid workers will get an above-inflation $18.70 a week pay rise.

The three per cent increase awarded by the Fair Work Commission splits the difference between the ACTU’s claim for a $27-a-week increase and employers who wanted the rise kept at $8.50 a week.

The new national minimum will be $640.90 per week, or $16.87 per hour. It amounts to a 50 cents per hour increase to the hourly rate.

In its decision, the commission found while the economic outlook was sound, there were some areas of concern, including continuing high youth unemployment.

It also warned of growing earnings inequality.

Commission president Justice Iain Ross said the outlook for contained inflation growth and relatively low aggregate wages growth “provide scope for increasing minimum wages without inflationary consequences’’.

“The rise in labour productivity together with the low growth in wages has meant that nominal unit labour costs barely rose over the past year and real unit labour costs remained at an historically low level,’’ it said.

“In aggregate, there are no signs of cost pressures arising from the labour market. There is no evidence of unusual levels of business failure.’’

The commission said the pay rise awarded was lower due to the superannuation guarantee rate increase to apply from next month.

However, it did not take into account the impact of carbon tax compensation, because the bill has yet to be passed by parliament.

Justice Ross said the real value of award minimum wages and the national minimum wage would decline if the increase was below the 2.9 per cent inflation rate.

“While real earnings have generally increased over the past decade, earnings inequality is increasing,’’ the commission said.

“Over the past five years, the rate of growth in average earnings and bargained rates of pay have outstripped the growth in minimum wages for award-reliant workers.

“This has reduced the relative living standards of award-reliant workers and reduced the capacity of the low paid to meet their needs, needs being a relative concept.

“We have decided that the range of considerations we are required to take into account favours the award of an increase which will result in a modest improvement in the real value of modern award minimum wages.

“There has been almost no growth in the real value of award rates over a period when other employees have had substantial wage increases in circumstances in which the economic environment has been sound.

“The deterioration in the relative living standards of award-reliant workers; the needs of the low paid; the recent widespread improvement in labour productivity growth; the historically low levels of real unit labour costs; and the absence, in aggregate, of cost pressures from the labour market, are all factors favouring a real increase in minimum wages.

“These factors are moderated by the SG (super guarantee) rate increase to apply from 1 July 2014 and the other considerations to which we have referred in our decision.’’

source: theaustralian.com.au