Annual Wage Review 2016–17 - [2017] FWCFB 3500

[2017] FWCFB 3500 [Note: a further Decision and correction and have been issued to this document; the changes arising have been incorporated in this version at [699] ]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.285 - Annual wage review

Annual Wage Review 2016–17
(C2017/1)

JUSTICE ROSS, PRESIDENT
VICE PRESIDENT HATCHER
DEPUTY PRESIDENT ASBURY
COMMISSIONER HAMPTON
MR COLE
PROFESSOR RICHARDSON
MR GIBBS

MELBOURNE, 6 JUNE 2017

Contents

Paragraph
1.	Overview and the Decision	[1]
2.	The Statutory Framework	[101]
3.	The Parties’ Proposals	[187]
4.	The Economy	[212]
5.	Relative Living Standards and the Needs of the Low Paid	[360]
6.	Promoting Social Inclusion through Increased Workforce Participation	[490]
7.	Encouraging Collective Bargaining	[591]
8.	Equal Remuneration	[638]
9.	Other Matters	[679]
10.	Conclusion	[741]
Appendix 1—Research for Annual Wage Reviews
Appendix 2—Proposed Minimum Wages Adjustments
Appendix 3—Index of Material
Appendix 4—List of Appearances

Abbreviations

2009–10 Review decision	Annual Wage Review 2009–10 decision
2011–12 Review decision	Annual Wage Review 2011–12 decision
2012–13 Review decision	Annual Wage Review 2012–13 decision
2013–14 Review decision	Annual Wage Review 2013–14 decision
2014–15 Review decision	Annual Wage Review 2014–15 decision
2015–16 Review decision	Annual Wage Review 2015–16 decision
2016–17 Review decision	Annual Wage Review 2016–17 decision
AAWI	average annualised wage increase
ABI and NSWBC	Australian Business Industrial and NSW Business Chamber Ltd
ABS	Australian Bureau of Statistics
ACCER	Australian Catholic Council for Employment Relations
ACOSS	Australian Council of Social Service
Act	Fair Work Act 2009 (Cth)
ACTU	Australian Council of Trade Unions
AFEI	Australian Federation of Employers and Industries
AHA and TAA	Australian Hotels Association and Tourism Accommodation Australia
Ai Group	Australian Industry Group
All Trades matter	All Trades Queensland Pty Limited v CFMEU and Ors
ANZSIC	Australian and New Zealand Standard Industrial Classification
APCSs	Australian Pay and Classification Scales
Apprentices decision	Modern Awards Review 2012—Apprentices, Trainees and Juniors, [2013] FWCFB 5411
ARA	Australian Retailers Association
ARTIO	Australian Road Transport Industrial Organisation
AWE	average weekly earnings
AWOTE	average weekly ordinary time earnings
AWRS	Australian Workplace Relations Study
ACCI	Australian Chamber of Commerce and Industry
Business SA	Chamber of Commerce and Industry South Australia
C2(b)	Principal Technical Officer
C4	Engineering Associate/Laboratory Technical Officer Level 1
C10	Engineering/Manufacturing Tradesperson Level 1
C14	Engineering/Manufacturing Employee Level 1
CCIQ	Chamber of Commerce and Industry Queensland
CCIWA	Chamber of Commerce and Industry Western Australia
Commission	Fair Work Commission
CPI	Consumer Price Index
DSP	Disability Support Pension
ERO	Equal Remuneration Order
EEH	Survey of Employee Earnings and Hours
GDP	gross domestic product
GFC	global financial crisis
GVA	gross value added
HES	Household Expenditure Survey
HIA	Housing Industry Association
HILDA	Household, Income and Labour Dynamics in Australia
IMF	International Monetary Fund
LCI	Living Cost Index
LNG	Liquefied natural gas
Manufacturing Award	Manufacturing and Associated Industries and Occupations Award 2010
MFP	Multifactor productivity
MGA	Master Grocers Australia
Miscellaneous Award	Miscellaneous Award 2010
MTA-SA	Motor Trade Association of South Australia
MYEFO	Mid-Year Economic and Fiscal Outlook
NAB	National Australia Bank
NAPSA	Notional Agreement Preserving State Awards
NCVER	National Centre for Vocational Education Research
NERR	Notice of Employee Representational Rights
NFF	National Farmers’ Federation
NMW	national minimum wage
NRA and HA	National Retail Association and Hardware Australia
NTWS	National Training Wage Schedule
OECD	Organisation for Economic Co-operation and Development
Panel	Expert Panel for annual wage reviews
PC report	Productivity Commission (2015), Workplace Relations Framework, Final Report, Final Report, Canberra, November
PCI	Performance of Construction Index
Penalty Rates decision	4 yearly review of modern awards – Penalty Rates decision [2017] FWCFB 1001
PMI	Performance of Manufacturing Index
PSI	Performance of Services Index
PPP	Purchasing Power Parity
R&CA	Restaurant and Catering Australia
RAND report	Hafner M, Taylor J, Pankowska P, Stepanek M, Nataraj S & van Stolk C (2016), The impact of the National Minimum Wage on employment: a meta-analysis, RAND Europe, a report for the UK Low Pay Commission, October
RBA	Reserve Bank of Australia
Peetz and Yu report	Peetz D and Yu S (2017), Explaining recent trends in collective bargaining, Fair Work Commission, Research Report 4/2017, February
Review	Annual Wage Review
RNNDI	Real net national disposable income
SAWIA	South Australian Wine Industry Association
Statistical Report	Statistical Report—Annual Wage Review 2016–17
SWS	Supported Wage System
SWSS	Supported Wage System Schedule
Transitional Act	Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
UK	United Kingdom
US	United States of America
VACC	Victorian Automobile Chamber of Commerce and Tasmanian Automobile Chamber of Commerce
WAD	Workplace Agreements Database
WPI	Wage Price Index
WEF	World Economic Forum
WGEA	Workplace Gender Equality Agency

1. Overview and the Decision

Introduction

[1] The Fair Work Act 2009 (Cth)(Act) requires the Expert Panel (Panel) to conduct and complete a review of the national minimum wage (NMW) and modern award minimum wages, in each financial year. The Panel must make a NMW order and may set, vary or revoke modern award minimum wages. The NMW order applies to award/agreement free employees and modern award minimum wages are the minimum wages contained in modern awards (including classification rates, junior rates and casual loadings). As part of its decision making process, s.285(2) of the Act requires that the Panel first form a view about the NMW rate it proposes to set in the annual wage review (Review) and then take that proposal into account in exercising its powers to set, vary or revoke modern award minimum rates. The relevant statutory framework is discussed in some detail in Chapter 2.

[2] This decision deals with the Annual Wage Review 2016–17 (2016–17 Review) and directly affects over 2.3 million employees in Australia who are award reliant. 1

[3] The main source for information on the number of employees affected by the Panel’s decision is from the ABS’ Survey of Employee Earnings and Hours (EEH). The most recent survey was undertaken in May 2016. 2

[4] From these data, the Australian Government and the Australian Council of Trade Unions (ACTU) submitted that 22.7 per cent of employees (over 2.3 million employees) had their pay set by an award in May 2016. 3 In addition, the Australian Government used data from the 2016 EEH to estimate that a further 66 100 employees on individual arrangements are paid the NMW rate.4 Further, as noted by the Australian Government, the NMW rate features in 45 of the 122 modern awards.5

[5] In addition, as we have previously accepted, the impact of Review decisions extends beyond award-reliant employees and employers as increases flow-on to other employees. 6

[6] This Chapter summarises the matters we have considered, our reasoning and the increase we have decided upon. A detailed discussion of these matters is provided in the subsequent Chapters. We do not repeat all of that material here but the views expressed in this Chapter should be seen in the context of our decision as a whole.

The Panel’s approach

[7] As part of the Review, the Panel considers both the setting of the NMW rate and whether to make any determinations varying modern award minimum wages. These tasks are undertaken by reference to the particular statutory criteria applicable to each function. The Panel’s task is to consider the relevant statutory criteria in the context of the prevailing economic and social environment in order to make its decision in the Review. 7 In taking into account available economic and social data, the Panel’s approach is to assess the changes in these data over the past year and to consider longer-term trends in order to determine how they inform the statutory criteria.

[8] When evaluating developments in the economy, the labour market, relative living standards and the needs of the low paid, collective bargaining and equal remuneration, we routinely look to developments over the medium and long term, as well as to changes over the past year. This is evident in the material that is included in the Statistical Report—Annual Wage Review 2016–17 (Statistical report) that accompanies the Review. Our capacity to take both a contemporary and a longer-term perspective is determined by the available data. A focus on developments over the past 12 months enables us to see how things have changed since the previous Review decision. The longer-term perspective reduces our reliance on contemporary data that can be volatile and subject to error. It also enables us to see the cumulative effects of the annual changes on which we focus, including our own decisions.

[9] As mentioned in the Annual Wage Review 2015–16 (2015–16 Review) decision, the Review is essentially a regulatory function the end result of which will affect the rights and responsibilities of the employees who are covered by the NMW order or a modern award and their employers. 8 The nature of the function and the powers exercised by the Panel bring with it important procedural fairness requirements and an obligation to deliver substantive justice.

[10] The Act requires that the Panel ensure that all persons and bodies (referred to collectively as parties) are given a reasonable opportunity to make and reply to written submissions. In this Review, a number of parties took this opportunity by lodging one or more written submissions and participating in consultations on 17 and 18 May 2017. The timetable for the Review and all of the submissions, transcript, research reports, and some additional economic data were published on the Fair Work Commission’s (Commission’s) website to ensure that all parties have had a reasonable opportunity to participate. The Panel considered all the material received from parties and the published research and data in making its decision.

[11] The Panel’s approach to its statutory function is encapsulated in the following extract from the Annual Wage Review 2014–15 (2014–15 Review) decision:

‘In taking into account available economic and social data, the Panel’s approach is broadly to assess the changes in these data from year to year and determine how they inform the statutory criteria. Put another way, and consistent with ACCI’s submission, if there were no change in the relevant considerations from one year to the next then, all other things being equal, a similar outcome would result.’ 9

[12] The approach set out in the above passage reflects the nature of judicial reasoning that underpins the rule of law. Broadly speaking, differently constituted Panels should evaluate the evidence and submissions before them in accordance with a consistent and stable interpretation of the legislative framework. Justice requires consistent decision making unless a difference can be articulated and applied. 10

[13] These public policy considerations inform the way Reviews are conducted. This does not mean that the Panel’s consideration of the statutory framework is stagnant. As the Panel made clear in the Annual Wage Review 2013–14 (2013–14 Review) decision, 11 there is nothing wrong with a party advancing a submission that a past Panel decision had wrongly construed a statutory provision and advancing an alternate construction. The Panel has reconsidered past decisions regarding the interpretation of particular provisions.12

[14] The above observation is also apposite to the Panel’s consideration of all of the issues before it. In conducting a Review, the Panel is engaged in a constant process of evaluating past assumptions and findings on the basis of contemporary data and the available evidence. To illustrate that point, in the current Review our consideration of the international research on the impact of increases in minimum wages on employment, particularly the United Kingdom (UK) research, has fortified our view that modest and regular wage increases do not result in disemployment effects. Further, that research suggests that the Panel’s past assessment of what constitutes a ‘modest’ increase may have been overly cautious, in terms of its assessed disemployment effects. We discuss these issues in Chapter 6.

[15] In each Review decision the Panel discloses the factors which are most relevant in a particular year, and we have done so in this decision. The Panel’s decision-making process should be as transparent as possible, and we identify the most significant issues which have impacted on the Panel’s decision in each particular Review. 13 But, as noted in the 2015–16 Review decision, we do not quantify the weight given to particular considerations.

[16] In past Review decisions, the Panel has rejected submissions calling for specific factors to be quantified. In the Annual Wage Review 2012–13 (2012–13 Review) decision, the Panel addressed submissions from the Australian Industry Group (Ai Group) and the National Farmers’ Federation (NFF) to quantify the discount to be applied to any minimum wage adjustment for that year due to the 0.25 per cent increase in the superannuation guarantee. The Panel stated that the legislative framework did not support an approach that quantifies each matter taken into account, rather, minimum wage fixation involves the exercise of broad judgment:

‘…we have not applied a direct, quantifiable, discount to the minimum wage increase, as proposed by Ai Group and the NFF. As we have noted, the AIRC [Australian Industrial Relations Commission] decisions following the introduction of the SGC [Superannuation Guarantee Charge] Acts provide no support for such an approach. Nor does the current legislative framework support such an approach. In reviewing modern award minimum wages and the NMW the Act requires us to have regard to a range of considerations. As we note in Chapter 2, there is a degree of overlap between the matters specified in the modern awards objective, the minimum wages objective and the objects of the Act. To the extent that these matters are of direct relevance to the Review, they may be grouped into three broad categories: economic; social; and collective bargaining. The range of considerations we are required to take into account calls for the exercise of broad judgment, rather than a mechanistic approach to minimum wage fixation.’ 14

[17] The wide range of data and information before the Panel and the often complex interaction between these factors mean that a comparison between Reviews will rarely be straightforward. There is no formulaic relationship between changes in particular indicators or factors over time and the outcome of particular Reviews. While the Panel seeks to explain its view of the circumstances (including forecasts or projections) prevailing in each Review in comparison with previous years, it is not feasible to quantify the weight given to particular factors in balancing the various considerations prescribed by the Act. This also explains why proposals premised on a fixed relationship between the rate of inflation and minimum wages directed towards real wage maintenance are not consistent with the statutory framework. These considerations also informed our recent decision to decline to adopt a medium-term target for the NMW. Before turning to that decision, it is convenient to first deal with the submissions which contended that we should take into account the Penalty Rates decision in determining any increase in the NMW and modern award minimum wages.

The Penalty Rates decision

[18] On 23 February 2017 the Commission issued a decision (the Penalty Rates decision) 15 dealing with the weekend and public holiday penalty rates and some related matters in a number of modern awards in the hospitality and retail sectors.

[19] The Penalty Rates decision determined that the existing Sunday penalty rates in the Hospitality, 16 Fast Food,17 Retail18and Pharmacy19 Awards did not achieve the modern awards objective, as they do not provide a fair and relevant minimum safety net.

[20] Broadly speaking, the effect of the Penalty Rates decision was to reduce Sunday penalty rates to 150 per cent for full-time and part-time employees and to 175 per cent for casual employees in the Hospitality, Retail and Pharmacy Awards. 20 In relation to the Fast Food Award, for reasons associated with the preferences of the relevant employees and the limited impact of Sunday work upon those employees (see Chapter7.5 of the Penalty Rates decision), the Full Bench decided to reduce the Sunday penalty rate, for Level 1 employees from 150 per cent to 125 per cent (for full-time and part-time employees) and from 175 per cent to 150 per cent (for casual employees). No change was made to the Sunday penalty rate for Level 2 and 3 employees.21

[21] The Penalty Rates decision also reduced the public holiday penalty rates in the Hospitality, Fast Food, Restaurant, 22 Retail and Pharmacy Awards.23 In essence, the existing rates for full-time and part-time employees are to be reduced from 250 per cent to 225 per cent and the public holiday rates for casuals are to be set at 250 per cent.

[22] In a subsequent decision, 24 the Full Bench determined the transitional arrangements in respect of these penalty rate reductions.

[23] A number of submissions referred to whether and how the Panel should consider the Penalty Rates decision.

[24] The Victorian Government submitted that the Penalty Rates decision should be taken into account in this Review. 25 The Federal opposition submitted that the Panel should consider the impact of the reduction in penalty rates on workers and the economy26 as they ‘will represent significant reductions in the total earnings and income of workers in these industries, and accordingly impact on fairness across our society and the performance of the Australian economy’.27

[25] Ai Group submitted that it would be ‘inappropriate for the quantum of any minimum wage increase to be any higher as a result of the Penalty Rates Decision’ 28 and any increase to the NMW to ‘compensate’ for the Penalty Rates decision ‘would negate the intended beneficial effects.’29

[26] During final consultations, the ACTU stated that while it was not convinced that the Review could deal directly with the Penalty Rates decision it accepted that it was a ‘general contextual matter’. 30

[27] The South Australian Government proposed that, upon the implementation of the Penalty Rates decision, a special national minimum wage be set for the ‘specific class of employees’ affected. 31 This proposition was not supported by any other party and Ai Group submitted that ‘[t]he FW Act does not enable a “special national minimum wage” to be set for the class of employees proposed by the South Australian Government’.32

[28] The Panel invited the South Australian Government to elaborate on the statutory or legislative grounds for this proposal in advance of consultations. 33 No reply was received from the South Australian Government.

[29] The Penalty Rates decision will, over time, reduce the employment costs of some employers covered by the Hospitality and Retail Awards affected by the decision. It is not appropriate to take account of the decision in some quantifiable or mechanistic way to support a particular level of increase in the NMW or in modern award minimum wages. Nor are we persuaded (on the limited submissions before us) that we have jurisdiction to set a ‘special NMW’ of the type proposed by the South Australian Government, even if we were persuaded of the merit of doing so, which we are not.

[30] The Penalty Rates decision does form part of the broad factual matrix against which the Review is conducted and, to that limited extent, we have taken it into account.

[31] We now turn to deal briefly with our preliminary decision regarding the adoption of a medium-term target for the NMW before turning to the economic, social and collective bargaining considerations we must take into account.

Preliminary Decision—medium-term target

[32] In the Annual Review 2016–17 Preliminary decision (the 2016–17 Preliminary decision),34 the Panel considered a proposal advanced by the ACTU, United Voice and others that the Panel adopt a medium-term (4-year) target for the NMW, set at 60 per cent of the median (adult) ordinary time earnings. Based on stated assumptions regarding increases in the Consumer Price Index (CPI) and real median wage growth, United Voice estimated that, to reach the target for the NMW of 60 per cent of median adult ordinary time weekly earnings by 2020, the NMW would have to increase by 6.5 per cent over each of the next 4 years, providing a total increase of $194. 35 The submissions advanced in support of the proposal argued that a medium-term target was necessary to assist the Panel with its consideration of the relative living standards and needs of the low paid, by addressing inequality, particularly the minimum wage relative to median earnings.

[33] As mentioned in the 2016–17 Preliminary decision, it was uncontroversial that in the context of a particular Review the Panel cannot ‘bind’ future panels in subsequent Reviews. It followed that any attempt to adopt a ‘hard’ or binding medium-term target for the NMW would be ineffective (even if it were accepted that the Panel had power to adopt such a target). The issue then became whether any useful and appropriate purpose would be served by adopting a more ‘flexible’ medium-term target of the type described by the ACTU and United Voice. For the reasons set out in the 2016–17 Preliminary decision we thought not and accordingly, we rejected the adoption of a medium-term target for the NMW, for the following reasons:

‘Those supporting a medium-term target for the NMW do so principally for the reason that they believe a target would increase the weight given to the requirements for the Panel to set rates that ‘establish and maintain a safety net of fair, relevant and enforceable minimum wages’; and to consider the relative living standards and the needs of the low paid’ as the Panel considers the full range of matters that it is required to take into account. Those who oppose a medium-term target share this view, that such a target would give greater weight to these criteria, and oppose it on those grounds (among others)…

As we have mentioned, no particular primacy is attached to any of the considerations identified in the modern awards objective (s.134(1)(a)–(h)) or in the minimum wages objective (s.284(1)(a)(e)). The adoption of the proposed target would, in our view, have the effect of elevating one statutory consideration (‘relative living standards and the needs of the low paid’) above all others on an ongoing basis, rather than requiring consideration of that matter in the social and economic context of each review and weighting it accordingly relative to the other considerations. As we have mentioned while the relevant statutory considerations must be taken into account it is important to bear in mind that they inform the modern awards objective and the minimum wages objective, but they do not themselves constitute the relevant statutory objectives.’ 36

[34] In essence, we did not adopt the medium-term target proposal because to adopt such a target would effectively elevate one statutory consideration (‘relative living standards and the needs of the low paid’) above the other considerations we are required to take into account.

[35] We also acknowledged the need to periodically assess the medium and long-term consequences of successive Review decisions and recognised that these decisions have both an immediate and cumulative impact. A chart on the minimum wage bite over the last 10 years is now included in the Statistical report. Parties can make submissions on the level and trends in the minimum wage bite in each Review and the Panel can consider these submissions at that time. As outlined earlier, the Panel also tracks changes in other relevant indicators over time, including factors such as productivity, living costs and inflation, employment and financial stress. It is also appropriate that medium and longer-term trends in these factors are considered as part of each Review.

[36] In rejecting the proposition that we adopt a medium-term target we made a number of observations regarding our statutory obligation to take into account ‘relative living standards and the needs of the low paid’, to which we refer later. We now turn to the economic, social and collective bargaining considerations which we must take into account.

Economic considerations

[37] As is often the case, not all the signals about the strength of the economy and the labour market point in the same direction.

[38] Our conclusions are influenced by the summary of economic conditions provided by the Reserve Bank of Australia (RBA) in its May 2017 Statement on Monetary Policy:

‘The Australian economy grew by 2.5 per cent over 2016, which is a bit below central estimates of potential growth. GDP growth rebounded to 1.1 per cent in the December quarter, confirming that the weak outcome in the September quarter largely reflected temporary factors. Recent data are consistent with moderate growth in early 2017. Employment growth was fairly subdued over 2016, but picked up to be around average in early 2017. Looking ahead, economic growth is expected to pick up gradually to be a bit above potential growth, supported by the low level of interest rates and the ongoing recovery in the global economy’. 37

[39] Gross domestic product (GDP) growth in Australia outperformed the average of the major 7 OECD countries across 4 of the 5 quarters to the December quarter 2016. Real net national disposable income (RNNDI) has grown more quickly than GDP over the past year, as the terms of trade have improved. Economic conditions have varied across states, with stronger growth in New South Wales and Victoria and weakest growth in Western Australia. As usual, the different parts of the economy have had diverse outcomes. Agriculture, forestry and fishing has done particularly well while there has been a decline in Construction.

[40] Business conditions generally look quite healthy. Profitability grew by a very strong 26 per cent for all industries and by a still strong 10 per cent for non-mining industries over the past year. As a result, the profit share of factor income rose. The most recent data (for 2015–16) show that the growth in profit margins was greater for small businesses than for all businesses. Consistent with these profit outcomes, bankruptcy rates remain quite low and the entry of new businesses exceeded the exits by a margin that exceeds that of 2015. The most reliable business surveys show that businesses see their conditions as the most positive since the global financial crisis (GFC). Growth in output was below the all industry average for 3 of the 4 most award-reliant industries and profits grew in only two of them.

[41] Labour productivity in the market sector grew more strongly across 2016 than it had in the previous 2 years. After some years of decline, multifactor productivity (MFP) continued its more recent modest growth. It grew more strongly over the year to the June quarter 2016 than it had in all but one of the past 10 years. The 2.3 per cent per annum growth in labour productivity in the period 2007–08 to 2014–15 exceeds or is virtually the same as growth in all periods from 1973–74, except 1993–94 to 1998–99.

[42] Labour productivity (GDP per hour worked) has grown by 14.1 per cent over the decade to 2016 and by 9.6 per cent over the period from the June quarter 2011 to the June quarter 2016. Over the last 5 years, the real value of the NMW and modern award rates has grown by less than half the rate of growth of labour productivity, at 4.3 per cent. This is displayed in Chart 1.1.

Chart 1.1: Changes in labour productivity and the real NMW, June quarter 2011 to June quarter 2016, index (Jun-11 = 100)

Source: Based on Fair Work Commission, Statistical report—Annual Wage Review 2016–17, 1 June 2017, Charts 2.1; 9.1; ABS, Australian National Accounts: National Income, Expenditure and Product, Dec 2016, Catalogue No. 5206.0; ABS, Consumer Price Index, Australia, Mar 2017, Catalogue No. 6401.0; Manufacturing and Associated Industries and Occupations Award 2010 (Manufacturing Award).

[43] We acknowledge that there is considerable variation in labour productivity growth at the industry level, reflecting the specific conditions in each industry, as well as a range of data measurement issues. But, as shown in Chart 4.26, over the past 2 business cycles the average annual growth rates in labour productivity (and multifactor productivity) in the Retail trade sector exceeded the average annual growth rates for the market sector generally. This is significant because the Retail trade sector accounts for more award-reliant employees than any other sector. 38

[44] The RBA has noted that the growth in nominal unit labour costs has been lower than our major trading partners and concludes that:

‘These differences in the growth rates of Australia’s unit labour costs versus those of its trading partners have led to a more marked improvement in Australia’s labour market competitiveness than in the competitiveness of the prices of its goods and services. Australia’s real effective exchange rate based on unit labour costs has depreciated by around 25 per cent since March 2013.’ 39

[45] Real and nominal unit labour costs have remained reasonably steady over the 4 years to mid-2016. The most recent sharp downturn is largely attributable to the rise in the terms of trade during the year. This is not expected to persist.

[46] The unemployment rate has remained steady for several years. There has been some rise in underemployment, but when the extra hours that the underemployed wish to work is taken into account, underemployment has risen only a little. On this basis, movements in underemployment are continuing to track the unemployment rate. A large majority of part-time workers were not seeking extra hours of work. While about 25 per cent said that they would like to work extra hours, only half of these had taken active steps to find more work.

[47] When the impact of the ageing of the population is taken into account, there has been no fall in either the participation rate or the employment to population ratio. These are signs of strength in the labour market. We note, however, that the full-time employment of men of working age continues its long-term decline.

[48] Inflation and wages have continued to grow at historically low rates. Consumer inflation has mostly been below 2.0 per cent, though the CPI rose by 2.1 per cent over the year to the March quarter 2017. The prices faced by producers were boosted by the rise in the terms of trade during 2016. Wages growth was highest for agreements and lowest (at 1.9 per cent) for the WPI. Growth in the NMW and modern award rates, at 2.4 per cent, exceeded inflation and growth in both the Wage Price Index (WPI) and average weekly ordinary time earnings (AWOTE).

[49] Employment continued to grow in 2016, but hours worked was flat. The main reasons for the small growth in hours worked were a relatively high growth in part-time employment (rather than full-time) and a decline in the average number of hours worked by full-time workers.

[50] Both the Commonwealth Treasury (Treasury) and the RBA expect growth to pick up in 2017–18, to around its potential growth rate. They expect that as a result, employment will grow at ‘around its long-run average’ 40 with little change in unemployment.

Social considerations

[51] The minimum wages objective and the modern awards objective require us to take into account ‘relative living standards and the needs of the low paid’ when setting minimum wage rates. Those matters must be considered, in the context of the relevant evidence in a particular Review. They are different, but related, concepts. 41

[52] The assessment of relative living standards requires a comparison of the living standards of workers reliant on the NMW and modern award minimum rates with those of other groups that are deemed to be relevant and focuses on the comparison between award-reliant workers and other employed workers, especially non-managerial workers. 42

[53] As to the assessment of the needs of the low paid, this requires an examination of the extent to which low-paid workers are able to purchase the essentials for a ‘decent standard of living’ and to engage in community life, assessed in the context of contemporary norms. In successive Review decisions the Panel has concluded that a threshold of two-thirds of median full-time wages provides ‘a suitable and operational benchmark for identifying who is low paid’, within the meaning of s.134(1)(a). 43

[54] Employees who are award reliant and/or receive low pay comprise substantial parts of the employee workforce. Approximately 23 per cent of employees are paid the equivalent of the NMW or a modern award minimum rate. Estimates of the share of employees who are low paid are less exact. The Australian Government provided the most detailed estimate of the numbers of the low paid and concluded that they comprised 12.4 per cent of all employees and 29.3 per cent of award-reliant employees. 44 On ACTU data, 42 per cent of the award reliant were paid at or below the C10 rate.45

[55] While 86 per cent of award-reliant employees are adults, they are disproportionately young, female, single, have no children, work part time, work as casuals and work for small businesses. The proportion working for large businesses has risen recently.

[56] In considering the relative living standards of the low paid the most appropriate comparator group is employees, especially non-managerial employees. The living standards of people who are not in the labour force, including the retired, is of some interest but carries only a small weight in our assessment of the relative living standards of the low paid.

[57] The relative standard of living of the low paid is affected by their wage, but also by other contributors to the equivalent disposable income of the households in which they reside. Taking these factors into account, it is appropriate to focus on the location of the low paid in the distribution of the disposable income of employee households. We prefer this distribution to the distribution that includes all households. The evidence before us shows that 28 per cent of low-paid employees are in the bottom 2 deciles of all employee households and 62 per cent are in the bottom half of that distribution. Low-paid men were more concentrated in the 2 bottom income deciles than were women, as were low-paid part-time workers. Around 70 per cent of award-reliant workers are located in the bottom half of the employee household income distribution. We think that it is clear that workers who receive the NMW or a modern award rate of pay are disproportionately located in the lower deciles of the relevant (i.e., employee) distribution of household disposable income.

[58] The NMW increased in real terms by 3.5 per cent over the decade and by 0.9 per cent over the year to the December quarter 2016. Although subject to year-to-year variation, the change in the real NMW has been positive in most years over the decade. Since 2009, the growth in the C14 and C10 rates has matched quite closely the growth in the WPI, and been only a little below growth in average weekly earnings (AWE) and average weekly ordinary time earnings (AWOTE).

[59] Measured as a proportion of median full-time adult earnings, the wage bite of the NMW/C14 award rate fell from a high of 58.4 per cent in mid-2004 to 53.8 per cent in mid-2016: most of the fall occurred from 2005–08. This compares with the Organisation for Economic Co-operation and Development (OECD) average of 52.0 (in 2015). Australia had a lower growth rate in minimum wages from 2003 to 2014 than did New Zealand, France, UK, United States of America (US), and Canada.

[60] As we acknowledged in the 2016–17 Preliminary Decision, the minimum wage bite is an important indicator of relative living standards and wage inequality 46 and Chart 1.2 shows the decline in the minimum wage bite over the 16 years to 2016, although it has stabilised in recent years.

Chart 1.2: C14 rate relative to median weekly earnings of full-time employees in main job, 2000 to 2016

Note: Median earnings are measured in August of each year. Following the amendments to the Workplace Relations Act 1996 (Cth) taking effect in 2006, the Federal Minimum Wage (FMW) was set at $12.75 per hour, equivalent to $484.50 per week.

Source: Statistical report, Chart 8.4;ABS, Characteristics of Employment, Australia, various, Catalogue No. 6333.0; ABS, Employee Earnings, Benefits and Trade Union Membership, Australia, various, Catalogue No. 6310.0; Metal, Engineering and Associated Industries Award 1998; Manufacturing Award (from 1 January 2010).

[61] There has been a substantial rise in inequality in the earnings distribution, much of which occurred in the earlier part of the decade to 2016 and indeed in the decade prior to that. There has not been a clear growth in inequality of earnings over the past 5 years. The real value of the NMW has taken a different path, first rising then remaining unchanged until 2014 when it rose again. Over the period, it rose by 4.3 per cent, a little behind the growth in the 10^th and 25^th percentiles of the earnings distribution of 5.8 per cent and 5.5 per cent, respectively (Chart 1.3).

Chart 1.3: Real weekly total earnings (full-time adult non-managerial employees) by percentile and the real NMW, 2011 to 2016—index (2011 = 100)

Note: The EEH Survey was not conducted in 2011, 2013, and 2015. Results for these years have been obtained through linear interpolation. Earnings data for 2014 and 2016 are based on full-time non-managerial employees paid at the adult rate.

Source: Statistical report, Chart 8.3; ABS, Consumer Price Index, Australia, Mar 2017, Catalogue No. 6401.0; ABS, Employee Earnings and Hours, Australia, various, Catalogue No. 6306.0; Manufacturing Award.

[62] The fact that there has been some growth, albeit modest, in the real value of the NMW and modern award rates means that those who remain dependent on the wage safety net have had their real earnings increased, even while their relative position has declined. In evaluating these changes, we consider both minimum rates and low earnings, being aware as we do so that the influence of changes to the NMW and modern award rates will be apparent in changes in the absolute and relative earnings of those at the bottom of the earnings distribution.

[63] Inequality in household disposable income did not rise as fast as that for earnings (moderated by the tax-transfer system and the composition and levels of employment of households). Although the latest data are for 2014, at that time there was no evidence of recent rises in inequality of household disposable income among at least the bottom half of the income distribution for all households. Nonetheless, on the Gini coefficient measure, Australian levels of inequality of household disposable income remain relatively high by OECD standards.

[64] Most hypothetical family types that have a NMW job have disposable incomes above the 60 per cent of median household disposable income relative poverty line, with the greatest margin being for a single parent with one child. All have had some small increase in their income over the period from 2011 to 2016, and over the year to December 2016, relative to the 60 per cent of median measure of poverty. The family types that have an income that is below the 60 per cent poverty line are those that have an adult who is not in the labour force (i.e., does not receive a wage or the Newstart Allowance). This applies whether or not there are children in the household. In another perspective on needs, in 2015, the proportion of low-paid employee households who reported financial stress was down across most measures compared with 2011 and little changed between 2014 and 2015. The evidence on financial stress is consistent with the evidence on inequality and poverty. Levels have risen over the longer period and remain elevated. But none has become worse in recent years.

[65] The Australian Government continued to put the case that the ‘tax-transfer system plays a large role in equalising the distribution of income among Australian households’ 47 and is more efficient in doing so than increases to the NMW and modern award rates. For the reasons given in Chapter 6 we do not accept that the tax-transfer system relieves us from the statutory obligation to consider relative living standards and the needs of the low paid when setting the NMW and modern award wages. Furthermore, the changes to the tax-transfer system in the past 2 budgets have reduced the financial assistance that is provided for low-income families with children. A majority of low-wage workers are single without children and the many who work full time are not assisted by the social welfare system; indeed, they have their disposable incomes reduced by income tax.

[66] The high and continuing levels of child poverty indicate that the combination of wages and social welfare assistance, are not sufficient to ensure that the needs of all low-wage families are met. We view this as a serious matter for society. This conclusion is supported by the evidence that about one-third of people in poverty lived in households for which wages were the main source of income and that about half of these families had children.

[67] The level of the NMW and modern award rates of pay have a significant role to play in seeking to reduce the financial stresses on families. But this role does not extend to a requirement to set the NMW at a level that ensures that a single-earner couple family with children on the NMW has an equivalent disposable income that exceeds the 60 per cent poverty line.

[68] Like many developed countries, Australia has come through an extended period of rising inequality. Rising inequality in the distribution of earnings has not translated fully into rising inequality in the distribution of household disposable income, partly because of the changing nature and work effort of households and partly because of the equalising effects of the tax-transfer system. The rise in inequality has been tempered in recent years. But it has left Australia with a legacy of relatively high inequality in earnings and in household disposable income, and disturbing levels of poverty especially among families with children. The NMW and modern award rates of pay affect the level of earnings of the low paid and of many employee households with relatively low disposable income. Higher levels of safety net pay rates will assist low-paid individuals and families to better meet their needs, and improve their relative standard of living. As a consequence, increasing the NMW and modern award minimum wage will also have some effect in reducing poverty and inequality.

[69] The Act requires the Panel to take into account ‘promoting social inclusion through increased workforce participation’ (s.284(1)(b)). Consistent with past Review decisions, we interpret this to mean increased employment. However, we also accept that modern award rates of pay impact upon an employee’s capacity to engage in community life and the extent of their social participation. Higher minimum wages can provide incentives to those not in the labour market to seek paid work, which needs to be balanced against potential negative impacts on the supply of jobs for low-paid workers. For the purposes of making a determination, we must form a view on the employment impacts of an increase in the NMW and modern award minimum wages.

[70] We conclude from our review of the international literature that the findings of research on the impact of increases in minimum wages on employment have different degrees of relevance for our task, depending on the broad comparability of the countries in question. Specifically, we judge the UK evidence to be quite relevant, both for its comparability and its quality. Although the US is less applicable, we note that its findings generally align with those of the UK. As a result of this international research, particularly in the UK, we have greater confidence in our view that modest and regular wage increases do not result in disemployment effects. Further, this research suggests that the Panel’s past assessment of what constitutes a ‘modest’ increase may have been overly cautious, in terms of its assessed disemployment effects. We are also of the view that minimum and award wage increases would likely lead to some positive, but probably small, effect on consumer demand and this needs to be taken into account.

[71] Some employer groups submitted that increases to minimum and award wages have been excessive having regard to the prevailing economic conditions, and that this level of increase should not be repeated in the current Review. However, the material before us does not cause us to change the view previously expressed that modest increases to the NMW and award wages do not have a discernible impact on employment levels in the prevailing circumstances.

[72] The data on workforce participation and the employment to population ratio do not support the proposition that, among persons within the main working age group (20–64 years), there is an increasing cohort of discouraged job seekers who have left the labour market.

[73] The Panel is of the view that the NMW is at a level that does not discourage people from seeking employment. Because of the operation of the tax-transfer system, the group with the smallest incentive to work is partners in couple families who wish to work part time.

[74] It is not clear what relationship there is, if any, between the level of underemployment and the recent history of increases in the NMW and award wages. There has been no real variation in underemployment rates for the past 2 years. The trend is likely to be driven largely by the decline in the proportion of full-time jobs and the increase in the proportion of part-time jobs over the last 30 years as a result of structural changes in the Australian economy. The unemployment rate remains the best indicator of spare capacity in the labour market, although the underemployment rate should continue to be monitored.

[75] Noting that low-paid work can be a stepping stone to higher-paid work, the Panel endorses the statement made in the 2014–15 Review decision that ‘[w]e cannot be indifferent to the standard of living of low-paid workers just because many do not stay in that situation for long periods’. 48

[76] The research on factors affecting apprenticeships and traineeships concluded that the withdrawal of government subsidies (notably for existing workers and part-time workers in some occupations) clearly contributed to the decline in commencement rates, and that while the 2013 Modern Awards Review decision (Apprentices decision) 49 to increase apprentice wages ‘may have played a role, it seems that any effect appears minor’ given the prevalence of over-award payments to apprentices and the lack of uniformity in commencement trends across individual trades.50

[77] In giving effect to both the modern awards objective and the minimum wages objective the Panel must take into account the principle of equal remuneration for work of equal or comparable value (s.134(1)(e) and s.284(1)(d)). The gender pay gap becomes a relevant consideration in our task because, as was stated in the Penalty Rates decision, it is an element of the requirement to establish a safety net that is fair as well as relevant. 51 It may also arise for consideration in respect of s.284(1)(b) (‘promoting social inclusion through workforce participation’), because it may have effects on female participation in the workforce. We deal with these issues in Chapter 8. For the reasons given in Chapter 8, the grant of a uniform percentage adjustment to the NMW and modern award wage rates would be the approach most consistent with the equal remuneration principle.

[78] In relation to the gender pay gap, women are disproportionately represented among the low paid and hence an increase in minimum wages is likely to promote gender pay equity, though we accept that moderate increases in minimum wages under awards would be likely to have a relatively small effect on the gender pay gap. Increases in minimum wages, particularly percentage adjustments that might exceed increases evident through bargaining, are more likely to have a beneficial impact that is broader than would be the case if flat rate increases were applied to lower classification levels. This is so because of the dispersion of women within award classification structures and the greater propensity for women to be paid award rates at all levels. The other mechanisms available under the Act, such as bargaining and equal remuneration provisions, also provide a further, more direct means of addressing this issue.

[79] The principle of equal remuneration and the gender pay gap consideration are factors in favour of an increase in minimum wages and as such we have considered this together with the various other statutory considerations the Panel is required to take into account.

Collective Bargaining

[80] The modern awards objective applies to the setting, varying or revoking of modern award minimum wages in a Review. One of the matters the Panel is required to take into account in giving effect to the modern awards objective is ‘the need to encourage collective bargaining’ (s.134(1)(b)). In making the NMW order, the Panel must give effect to the minimum wages objective. The minimum wages objective makes no reference to ‘the need to encourage collective bargaining’. However, as we note in Chapter 2, one of the purposes of the Act is to encourage collective bargaining and hence, it is appropriate to take that legislative purpose into account in making the NMW order.

[81] In general terms, there has been a slight trend away from collective bargaining and an increase in award reliance in recent times. Research Report 4/2017—Explaining recent trends in collective bargaining examined factors that have influenced recent changes in collective agreement coverage. It is clear from that report—the findings of which were not challenged by any party—that there are issues of statistical classification 52 as well as economic, structural and societal changes that have contributed to the overall trend towards an increase in award reliance and that the level of minimum wages has not had a significant effect.

[82] As the Panel observed in the 2013–14 Review decision, 53 the available research does not reveal any particular relationship between the incentive to bargain and increases in the NMW and modern award minimum wages. Instead it points to a complex mix of factors that may contribute to employee and employer decision-making about whether or not to bargain.

[83] The Panel’s previous conclusions as to the relationship between increases in minimum wages and collective bargaining remain valid, in particular:

• whilst the gap between minimum wages and bargained wages is likely to increase the incentive for award-reliant employees to bargain, a large gap may be a disincentive for employers to bargain; and
• minimum wages are only one element of the incentive to bargain. 54

[84] Further, while Review decisions determine the floor of such a gap, bargaining outcomes determine the extent of the gap

[85] Given the complexity of the factors which may contribute to decision making about whether or not to bargain, we are unable to predict the precise impact of our decision on collective bargaining with any confidence. It is likely that the increase we have determined in this Review will impact upon the incentive to bargain in various sectors in different ways, but will not, in aggregate, discourage collective bargaining. However, we are not satisfied that the increase we have determined in this Review will encourage collective bargaining and this is a factor we have taken into account, and balanced against the other matters we are required to consider, in determining the outcome of this Review.

[86] In reaching this conclusion, we accept that minimum wage increases may influence bargained outcomes, depending upon the circumstances in each industry sector, including the degree to which the existing bargained or over-award rates exceed the minimum award rates.

The Decision

[87] The Panel received submissions from the Australian Government, several state governments, bodies representing the interests of employees, employers and other groups. Many of these submissions did not advance a specific proposal as to the quantum of any increase to the NMW or modern award minimum wages, including most government submissions. One submission proposed that there be no increase in minimum wages. The parties’ positions are set out in Chapter 3.

[88] We have taken into account all of the relevant statutory considerations. As mentioned in Chapter 2, the underlying intention of the various economic considerations in ss.3, 134 and 284 is that the Panel is required to take into account the effect of its decisions on national economic prosperity and in doing so give particular emphasis to the economic indicators mentioned in the relevant statutory provisions.

[89] The key changes in the economic environment evident in this Review are:

● RNNDI increased by 6.8 per cent over the year to the December 2016, after it fell in the previous year.
● All measures of inflation have increased since the March quarter 2016, but are currently at the lower end of the RBA’s medium-term target range (CPI increased by 2.1 per cent over the year to the March quarter 2017). 55
● Over the 5 years to the December quarter 2016, labour productivity growth in the market sector was higher than the previous 5-year period and rose sharply in 2016.
● On an annual basis, profit growth was particularly strong in 2016 compared with the preceding years and above the 5-year and 10-year averages for both total industries and non-mining industries.
● The principal business conditions surveys show that the assessment of business conditions is positive and above long-term average levels.

[90] The economy has continued to grow, slightly below trend, with real GDP increasing by 2.4 per cent over the year to the December quarter 2016. The unemployment rate has been relatively stable, increasing slightly from 5.7 per cent in April 2016 to 5.8 per cent in April 2017. Wages growth remained subdued, growth in the WPI was lower in 2016 than in 2015, growth in AWOTE rose. The subdued inflation means that there is little risk to the macroeconomic inflationary environment from our decision.

[91] The prevailing economic circumstances provide an opportunity to improve the relative living standards of the low paid and to enable them to better meet their needs. Over the last 5 years, the real value of the NMW and modern award rates has grown at 4.3 per cent which is less than half the rate of growth of labour productivity.

[92] Our consideration of the international research on the impact of increases in minimum wages on employment, particularly the UK research, has fortified our view that modest and regular wage increases do not result in disemployment effects and that research suggests that the Panel’s past assessment of what constitutes a ‘modest’ increase may have been overly cautious, in terms of its assessed disemployment effects.

[93] The level of increase we have decided upon will not lead to inflationary pressure and is highly unlikely to have any measurable negative impact on employment. It will, however, mean an improvement in the real wages for those employees who are reliant on the NMW and modern award minimum wages and an improvement in their relative living standards.

[94] The Panel has taken into account the circumstances of different regions, industries and sectors as part of its broader consideration of the national economy. These circumstances include that there are economic challenges currently facing certain regions and sectors as a result of the transition taking place in the economy and other factors including natural disasters. No exceptional circumstances have been demonstrated such as to warrant a deferral of the increases we have awarded.

[95] We have determined that it is appropriate to increase the NMW. The factors identified above have led us to award an increase of 3.3 per cent. The NMW will be $694.90 per week or $18.29 per hour. The hourly rate has been calculated by dividing the weekly rate by 38, on the basis of the 38-hour week for a full-time employee. This constitutes an increase of $22.20 per week to the weekly rate or 59 cents per hour to the hourly rate.

[96] Having regard to the proposed NMW and the other relevant considerations, we also consider that it is appropriate to adjust modern award minimum wages.

[97] Some parties proposed a higher adjustment to the NMW than the adjustment they proposed to modern minimum rates (or to award rates above a certain classification level), with the apparent intention of providing a more substantial increase to the lowest paid and particularly those living in poverty.

[98] In previous Reviews, the Panel has accepted that if the low paid are forced to live in poverty then their needs are not being met and that those in full-time employment can reasonably expect a standard of living that exceeds poverty levels. 56 While we have not departed from that position, we acknowledge that the increase we propose to award will not lift all award-reliant employees out of poverty (measured by household disposable income below a 60 per cent median income poverty line), particularly those households with dependent children and a single-wage earner. However, to grant an increase to the NMW and award minimum rates of the size necessary to immediately lift all full-time workers out of poverty, or an increase of the size proposed by some parties, is likely to have adverse employment effects on those groups who are already marginalised in the labour market with a corresponding impact on the vulnerability of households to poverty due to loss of employment or hours.

[99] As to the form of the increase, past flat dollar increases in award minimum rates have compressed award relativities and reduced the gains from skill acquisition. In doing so, classification structures designed to properly remunerate work according to its value, and to ensure that equal minimum rates are provided for work of equal or comparable value both within and across awards, have been distorted to a degree. A fundamental feature of the minimum wage objective is the requirement to establish and maintain ‘a safety net of fair minimum wages’, and a necessary element of this is that the level of those wages bears a proper relationship to the value of the worked performed. 57 Flat dollar increases may have had the effect of undermining the achievement of the objective in this respect. The position of the higher award classifications (applying to work of higher value) has reduced relative to market rates and to average earnings and has fallen in terms of real purchasing power. A uniform percentage increase will particularly benefit women workers, because at the higher award classification levels women are substantially more likely than men to be paid the minimum award rate rather than a bargained rate. These matters have led us to determine a uniform percentage increase. The considerations to which we have referred have led us to increase modern award minimum wages by 3.3 per cent.

[100] The determinations and order giving effect to our decision will come into operation on 1 July 2017. Weekly wages will be rounded to the nearest 10 cents.

2. The Statutory Framework

General

[101] In conducting and completing a Review each financial year, the Panel must review the NMW and modern award minimum wages and make a NMW order 58 as set out in s.285(2) of the Act:

‘In an annual wage review, the FWC:

(a) must review:

(i) modern award minimum wages; and
(ii) the national minimum wage order; and

(b) may make one or more determinations varying modern awards to set, vary or revoke modern award minimum wages; and
(c) must make a national minimum wage order.’

[102] The Act requires the Panel to take into account a number of considerations in performing its functions. 59 The relevant statutory considerations are set out in the object of the Act,60 the modern awards objective61 and the minimum wages objective.62 The Panel must conduct the Review within the legislative framework of the Act.

[103] As part of the Review, the Panel considers both the setting of the NMW rate and whether to make any variation determinations in respect of modern award minimum wages. Each of these tasks is undertaken by reference to the particular statutory criteria applicable to each function.

National minimum wage order

[104] The NMW order applies to award/agreement free employees 63 and is dealt with in Division 4 of Part 2-6 of the Act.64 The NMW order sets both the NMW65 and special NMWs which apply to employees who are juniors; to whom training arrangements apply; or who have a disability.66

[105] An award/agreement free employee cannot be paid less than the rate of pay specified in the NMW order. Further, if an enterprise agreement applies to an employee and the employee is not covered by a modern award then the employee’s base rate of pay under the enterprise agreement must not be less than the rate specified in the NMW order. 67

[106] The minimum wages objective and the object of the Act apply to the review and making of a NMW order. 68 But the modern awards objective is not relevant to the review and making of a NMW order,69 as the making of such an order does not involve the performance or exercise of modern award powers.

Modern award minimum wages

[107] Modern award minimum wages are the rates of minimum wages in modern awards, including:

(a) wage rates for junior employees, employees to whom training arrangements apply and employees with a disability;
(b) casual loadings; and
(c) piece rates. 70

[108] The making of a NMW order and the review and variation of modern award minimum wages are separate, but related, functions. They are related because they both form part of the ‘safety net’ (see s.3(b)) and s.285(3) provides that in exercising its powers to set, vary or revoke modern award minimum wages, the Panel ‘must take into account the rate of the national minimum wage that it proposes to set in the Review’. It follows from s.285(3) that as part of the decision-making process in a Review the Panel must first form a view about the rate of the NMW it proposes to set (taking into account the statutory considerations relevant to that discrete task) and then take that proposed NMW rate into account (along with the other relevant statutory considerations) in exercising its powers to set, vary or revoke modern award minimum wage rates.

[109] As the Panel observed in the 2014–15 Review decision, 71 this does not suggest some sort of bifurcated process whereby the Panel first makes a NMW order (which includes setting the NMW), before turning its mind to exercising its review powers to set, vary or revoke modern award minimum wage rates. So much is clear from s.285(2) which suggests that the 2 tasks take place in the context of a single Review; s.285(3) which refers to the NMW rate the Panel proposes to set in the Review (as opposed to the NMW rate as currently set in a NMW order);72 and the statutory direction that both the NMW order73 and Review variation determinations come into operation on 1 July in the next financial year (absent exceptional circumstances74).

[110] We now turn to the principal statutory objectives to which we must have regard.

[111] The minimum wages objective applies to the exercise of functions and powers under Part 2-6 of the Act (which includes the Review) 75 and is set out in s.284 of the Act:

‘284 The minimum wages objective

What is the minimum wages objective?

(1) The FWC must establish and maintain a safety net of fair minimum wages, taking into account:

(a) the performance and competitiveness of the national economy, including productivity, business competitiveness and viability, inflation and employment growth; and
(b) promoting social inclusion through increased workforce participation; and
(c) relative living standards and the needs of the low paid; and
(d) the principle of equal remuneration for work of equal or comparable value; and
(e) providing a comprehensive range of fair minimum wages to junior employees, employees to whom training arrangements apply and employees with a disability.

This is the minimum wages objective.’

[112] The modern awards objective applies to the performance or exercise of ‘modern award powers’, 76 (which are defined to include the variation of modern award minimum wages),77 and is set out in s.134 of the Act:

‘134 The modern awards objective
What is the modern awards objective?
(1) The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:

(a) relative living standards and the needs of the low paid; and
(b) the need to encourage collective bargaining; and
(c) the need to promote social inclusion through increased workforce participation; and
(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and
(da) the need to provide additional remuneration for:

(i) employees working overtime; or
(ii) employees working unsocial, irregular or unpredictable hours; or
(iii) employees working on weekends or public holidays; or
(iv) employees working shifts; and

(e) the principle of equal remuneration for work of equal or comparable value; and
(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and
(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and
(h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.

This is the modern awards objective.’

[113] Further, s.578(a) provides that the Panel must take into account the objects of the Act in performing its functions or exercising its powers in a Review.

[114] Sections 134, 284 and 578 of the Act each direct the Panel to ‘take into account’ certain specified considerations in conducting and completing a Review. In Peko-Wallsend, 78 the matters the decision maker must ‘take into account’ are those matters the decision maker is bound to consider and treat as matters of significance in the decision-making process.79

[115] There is a substantial degree of overlap in the considerations the Panel is required to take into account under the minimum wages objective and under the modern awards objective, though some of these considerations are not expressed in the same terms. 80

[116] In particular, there are differences in the expression of the economic considerations that the Panel is required to take into account under the modern awards objective and the minimum wages objective. 81 However, the underlying intention of the various economic considerations referred to in ss.134 and 284 is that the Panel takes into account the effect of its decisions on national economic prosperity and in so doing gives particular emphasis to the economic indicators specifically mentioned in the relevant statutory provisions.

[117] Both the minimum wages objective and the modern awards objective require the Panel to take into account:

promoting social inclusion through increased workforce participation; 82

relative living standards and the needs of the low paid; 83

the principle of equal remuneration for work of equal or comparable value; 84 and

various economic considerations. 85

[118] However, the modern awards objective also requires the Panel to take into account ‘the need to encourage collective bargaining’ 86 whereas the minimum wages objective makes no express reference to any such consideration. As we have mentioned it is the minimum wages objective, not the modern awards objective, which is relevant to setting the NMW rate. But as the Panel observed in the 2014–15 Review decision,87 the fact that the minimum wages objective does not require the Panel to take this consideration into account does not make much difference, in practice, to the Panel’s task. This is because the Panel is required to take into account the object of the Act and one of the stated means by which the object of the Act is given effect is ‘through an emphasis on enterprise level collective bargaining’ (s.3(f)). While not expressed in the same terms as in the modern awards objective, it is plain from s.3(f) and a reading of the Act as a whole that one of the purposes of the Act is to encourage collective bargaining. It is appropriate that the Panel takes that legislative purpose into account in setting the NMW rate.

[119] The review and variation of modern award minimum wages and making a NMW order are separate, though related, functions. However, for the reasons given, there is little practical difference between the range of considerations the Panel is obliged to take into account in performing these 2 functions. We return later to the relationship between the NMW and modern award minimum wages when we deal with the Australian Catholic Council for Employment Relations’ (ACCER’s) submission.

[120] The general matters the Panel must take into account in performing its functions can be conveniently grouped into three broad categories:

economic; 88

social; 89 and

collective bargaining. 90

[121] We have considered these matters in making our decision and specifically address them in Chapters 4–8 of this decision. Chapter 3 discusses the positions of the parties to this Review.

[122] We now turn to deal with aspects of the proper construction of the modern awards objective and the minimum wages objective.

[123] The proper construction of the expression ‘a fair and relevant minimum safety net of terms and conditions’ 91 in the modern awards objective was the subject of some consideration in the 4 yearly review of modern awards – Penalty Rates – hospitality and retail industries decision (the Penalty Rates decision).92 Three points emerge from the consideration of that expression in the Penalty Rates decision.

[124] First, ‘fairness’ in the context of the modern awards objective is to be assessed from the perspective of the employees and employers covered by the modern award in question. 93

[125] Second, the word ‘relevant’ is intended to convey that a modern award should be suited to contemporary circumstances. As stated in the Explanatory Memorandum to what is now s.138:

‘… the scope and effect of permitted and mandatory terms of a modern award must be directed at achieving the modern awards objective of a fair and relevant safety net that accords with community standards and expectations.’ (emphasis added) 94

[126] Finally, as to the expression ‘minimum safety net of terms and conditions’, the Penalty Rates Full Bench rejected a proposition advanced in the joint employer reply submission that the reference to a ‘minimum safety net’ in s.134(1) means the ‘least … possible’ to create a ‘minimum floor’, noting that:

‘… the argument advanced pays scant regard to the fact the modern awards objective is a composite expression which requires that modern awards, together with the NES, provide ‘a fair and relevant minimum safety net of terms and conditions’. The joint employer reply submission gives insufficient weight to the statutory directive that the minimum safety net be ‘fair and relevant’. Further, in giving effect to the modern awards objective the Commission is required to take into account the s.134 considerations, one of which is ‘relative living standards and the needs of the low paid’ (s.134(1)(a)). The matters identified tell against the proposition advanced in the joint employer reply submission.’ 95

[127] We agree with the above observations and adopt them in our consideration of the modern awards objective. We are also of the view that the observations as to the meaning of ‘fair’ and ‘safety net’ in the modern awards objective apply with equal force to the meaning of those words in the minimum wages objective.

[128] In giving effect to these statutory objectives the Panel must take into account the particular considerations identified in ss.134(1)(a) to (h) (the s.134 considerations) and 284(1)(a) to (e) (the s.284 considerations). While the statutory considerations referred to must be taken into account it is important to bear in mind that these considerations inform the modern awards objective and the minimum wages objective, but they do not themselves constitute the relevant statutory objectives. The modern awards objective is to ‘ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions.’ 96 The minimum wages objective is to ‘establish and maintain a safety net of fair minimum wages.’97 These objectives are very broadly expressed and the notion of fairness is at the heart of both statutory objectives. As we have mentioned, fairness in this context is to be assessed from the perspective of the employees and employers covered by the NMW or the modern award in question.98

[129] As the Panel has observed in previous Review decisions, there is often a degree of tension between the economic, social and other considerations which the Panel must take into account. No particular primacy is attached to any of these considerations. 99 For example, a substantial wage increase may better address the needs of the low paid and improve the relative living standards of award-reliant employees, but it may (depending upon the prevailing economic circumstances) also reduce the capacity to employ the marginalised and hence not promote social inclusion through increased workforce participation. It is this complexity that has led the Panel to reject a mechanistic or decision rule approach to wage fixation, such as the adoption of real wage maintenance,100 and, more recently, to reject the adoption of a medium-term target for the NMW.101

[130] Further, as ABI observes in its submission in these proceedings:

‘Distilling the range of factors that must be considered by the Panel into a simple and clear strategy for approaching AWR decisions is not an easy exercise. The Act requires the Panel to weigh up the trade-offs presented by the inherent tensions in the statutory factors that it must take into account.’ 102

[131] The submissions made in this Review have raised five discrete issues which relate to the statutory framework, in particular:

the setting of the NMW—‘beneficial’ legislation;

the modern awards objective— ‘a fair and relevant minimum safety net’;
the setting of the NMW and modern award relativities;

whether the Panel made an ‘error of law’ in the 2015–16 Review decision; and

proposals that the Panel should consider award, industry or regional variations.

(i) Beneficial legislation

[132] ACCER submits that the provisions of the Act which deal with the setting of the NMW should be ‘treated as beneficial legislation and should not be construed or applied narrowly’. 103

[133] The statutory provisions relating to the Review and to NMW orders are set out in Divisions 3 (ss.284–292) and 4 (ss.293–299) of Part 2-6 of the Act. The purpose of Chapter 2 is to prescribe minimum terms and conditions of employment for national system employees (including those terms and conditions arising from a NMW order). 104

[134] A remedial or beneficial provision is one that gives some benefit to a person and thereby remedies some injustice. 105 We accept that it is appropriate to characterise the statutory provisions relating to the variation of the NMW as remedial or beneficial provisions. They are intended to benefit national system employees. Further, as the Panel observed in its Preliminary Decision dealing with the proposed adoption of a medium-term target for the NMW:

‘The effect of a fair and relevant safety net is to raise wages received by the low paid above those that they would receive in the absence of enforceable minimum wages.’ 106

[135] A NMW order operates in the same way. An award/agreement free employee cannot be paid less than the rate specified in the NMW order and hence, in practice, the effect of such an order is to raise the wages received by the lowest paid award/agreement free employees above what they would receive in the absence of such an order. Contrary to the submissions advanced by Ai Group, it is appropriate to regard such a legislative scheme as remedial or beneficial. It is intended to create a regulatory instrument which intervenes in the market setting minimum wages, to lift the floor of such wages.

[136] The proper approach to the construction of remedial or beneficial provisions was considered by the Full Bench in Bowker and others v DP World Melbourne Limited T/A DP World, Maritime Union of Australia and others 107 (‘Bowker’). In Bowker the Full Bench said:108

‘The characterisation of these provisions as remedial or beneficial has implications for the approach to be taken to their interpretation. As the majority (per Gibbs CJ, Mason, Wilson and Dawson JJ) observed in Waugh v Kippen:

“...the court must proceed with its primary task of extracting the intention of the legislature from the fair meaning of words by which it has expressed that intention, remembering that it is a remedial measure passed for the protection of the worker. It should not be construed so strictly as to deprive the worker of the protection which Parliament intended he should have.”

Any ambiguity is to be construed beneficially to give the fullest relief that a fair meaning of its language will allow, provided that the interpretation adopted is ‘restrained within the confines of the actual language employed that is fairly open on the words used.’ As their Honours Brennan CJ and McHugh J put it in IW v City of Perth:

“...beneficial and remedial legislation, like the [Equal Opportunity] Act, is to be given a liberal construction. It is to be given ‘a fair, large and liberal’ interpretation rather than one which is ‘literal or technical’. Nevertheless, the task remains one of statutory construction. Although a provision of the Act must be given a liberal and beneficial construction, a court or tribunal is not at liberty to give it a construction that is unreasonable or unnatural.”

If the words to be construed admit only one outcome then that is the meaning to be attributed to the words. However if more than one interpretation is available or there is uncertainty as to the meaning of the words, such that the construction of the legislation presents a choice, then a beneficial interpretation may be adopted.’ (footnotes omitted)

[137] We adopt the above remarks and apply them to the matter before us.

[138] Section 15AA of the Acts Interpretation Act 1901 is also relevant. It requires that a construction that would promote the purpose or object of the Act is to be preferred to one that would not promote that purpose or object (noting that s.40A of the Act provides that the Acts Interpretation Act 1901, as in force at 25 June 2009, applies to the Act). The purpose or object of the Act is to be taken into account even if the meaning of a provision is clear. When the purpose or object is brought into account an alternative interpretation may become apparent. If one interpretation does not promote the object or purpose of the Act, and another does, the latter interpretation is to be preferred. Of course, s.15AA requires us to construe the Act, not to rewrite it, in the light of its purpose. 109

448 ACTU submission, 29 March 2017 at para. 101.

449 Ibid.

450 [2014] FWCFB 3500 at para. 426.

451 [2016] FWCFB 3500 at para. 97; 471–472.

452 AFEI submission, 29 March 2017 at para. 56; PC report at p. 226.

453 ACTU submission, 29 March 2017 at pp. 30–40.

454 de Linde Leonard M, Stanley TD & Doucouliagos H (2014), ‘Does the UK Minimum Wage Reduce Employment? A meta-regression analysis’, British Journal of Industrial Relations, Vol. 52, No. 3, pp. 499–520.

455 Low Pay Commission (2016), National Minimum Wage: Low Pay Commission Report Autumn 2016, November; Office for National Statistics, UK consumer price inflation: Apr 2017.

456 Data for 2017 is based on the 2016 conversion rate. OECD Data (2017), Purchasing power parities, viewed 24 May 2017, < Low Pay Commission (2017), A rising floor: the latest evidence on the National Living Wage and youth rates of the minimum wage, April, Borland J (2016), A brief review of US studies of the effect of the minimum wage on employment, Labour market snapshot #29, Department of Economics, University of Melbourne, p. 3.

459 Manning A (2016), The Elusive Employment Effect of the Minimum Wage, CEP Discussion Paper, May, p. 3.

460 Reich M, Allegretto S, Jacobs K & Montialoux C (2016), The effects of a $15 minimum wage in New York State, Policy Brief, Center on Wage and Employment Dynamics, Institute for Research on Labor and Employment, University of California, Berkeley, March.

461 Amlinger M, Bispinck R & Schulten T (2016), The German Minimum Wage: experience and perspectives after one year, WSI Institute of Economic and Social Research, January, p. 14.

462 ACTU submission, 29 March 2017 at para. 303.

463 Ibid at para. 307.

464 Ibid paras 312–314.

465 Ai Group submission in reply, 13 April 2017 at pp. 14–15.

466 Ibid at p. 15.

467 ABI and NSWBC submission in reply, 13 April 2017 at p. 7.

468 Ibid.

469 ARA submission, 29 March 2017 at p. 5.

470 Ibid at pp. 14–15.

471 MGA submission, 28 March 2017 at p. 12.

472 R&CA submission, 29 March 2017 at para. 25.

473 Ibid at para. 29.

474 Ibid at para. 2.

475 Department of Employment (2016), Employment Outlook to November 2020, Labour Market Research and Analysis Branch, p. 11.

476 Ibid at p. 4.

477 Ibid.

478 R&CA submission, 29 March 2017 at para. 5.

479 Ibid at para. 7.

480 ABI and NSWBC submission, 29 March 2017 at p. 20.

481 Ibid at p. 20.

482 [2013] FWCFB 4000 at para. 441.

483 [2016] FWCFB 3500 at paras 195–196.

484 R&CA submissions, 29 March 2017 at para. 4; ABS, Retail trade, Australia, Catalogue No. 8501.0.

485 See Australian Government submission, 29 March 2017 at para. 111.

486 Fair Work Commission, Industry Profile – Accommodation and food services, Material to assist AM2014/305—Penalty rates case, Table 5.9.

487 Ai Group submission, 29 March 2017 at p. 29.

488 Ibid at pp. 28–29.

489 Statistical report, Table 6.11.

490 Ai Group submission, 29 March 2017 at p. 29.

491 Statistical report, Table 6.14; ABS, Participation, Job Search and Mobility, Australia, February 2016, Catalogue No. 6226.0

492 [2016] FWCFB 3500 at para. 488.

493 [2016] FWCFB 3500 at para. 482.

494 ACTU submission, 29 March 2017 at para. 243.

495 Australian Government submission, 29 March 2017 at para. 137.

496 AFEI submission, 29 March 2017 at para. 82.

497 Ibid at para. 71.

498 RBA, Statement on Monetary Policy, February 2017 at p. 38, Box B: Underemployment and Labour Market Spare Capacity.

499 RBA, Statement on Monetary Policy, February 2017 at p. 40.

500 AFEI submission, 29 March 2017 at paras 76–78.

501 ABS, Labour Force, Australia, Nov 2016, Catalogue No 6202.0; Spotlight on underemployment.

502 Ibid.

503 AFEI submission, 29 March 2017 at para. 79.

504 Ai Group submission, 29 March 2017 at p. 26.

505 [2016] FWCFB 3500 at para. 493; [2015] FWCFB 3500 at para. 436; [2013] FWCFB 4000 at para. 461.

506 [2016] FWCFB 3500 at para. 493; [2015] FWCFB 3500 at para. 437.

507 Australian Government submission, 29 March 2017 at para. 236.

508 Ibid, Appendix C.

509 [2015] FWCFB 3500 at para. 437.

510 Australian Government submission, 29 March 2017 at para. 245.

511 67.8 per cent spend less than one year in low paid employment. Of these 76.6% move to higher paid work. Thus 51.9 per cent (76.6 per cent of 67.8 per cent) who spend less than one year in low paid work move to higher paid work.

512 Australian Government response to questions on notice, 22 May 2017, pp. 7–9.

513 Australian Government submission, 29 March 2017 at para. 242; CCIWA submission, 29 March 2017 at para. 3.6.

514 [2016] FWCFB 3500 at para. 508.

515 ACCI submission in reply, 21 April 2017 at para. 66.

516 HIA submission, 29 March 2017 at p. 4.

517 NFF submission, 29 March 2017 at pp. 5–6.

518 VACC submission, 29 March 2017 at p. 5.

519 [2013] FWCFB 5411.

520 VACC submission, 29 March 2017 at p. 5.

521 [2013] FWCFB 5411 at paras 177–178.

522 HIA submission, 29 March 2017 at para. 2.1.

523 NCVER (2017), Australian vocational education and training statistics: apprentices and trainees 2016 – September quarter, NCVER, Adelaide, p. 5.

524 Ibid.

525 Ibid at p. 6.

526 Karmel T, Factors affecting apprenticeships and traineeships, research commissioned by the Fair Work Commission, Research Report 3/2017, Part II, February, p. 53.

527 Ibid, p. 71.

528 [2015] FWCFB 3500 at para. 453.

529 [2017] FWCFB 1001 at para. 87.

530 Fair Work Act, s.3(f).

531 Peetz D & Yu S (2017), Explaining recent trends in collective bargaining, Fair Work Commission, Research Report 4/2017, February, pp. 7–8.

532 Ibid, p. 8.

533 Australian Government submission, 29 March 2017 at para. 219.

534 Ai Group submission, 29 March 2017 at p. 30.

535 ACTU submission, 29 March 2017 at paras 79–80.

536 ACCI submission, 29 March 2017 at para. 211.

537 Peetz D and Yu S (2017), Explaining recent trends in collective bargaining, Fair Work Commission, Research Report 4/2017, February, p. 12.

538 Ibid, p. 18.

539 Australian Government submission, 29 March 2017 at para. 37.

540 ACCI submission, 29 March 2017 at para. 203.

541 Ibid at paras 202–206.

542 Australian Government response to questions for consultations, 12 May 2017 at p. 13.

543 ACTU response to questions for consultations, 15 May 2017 at pp. 16–17.

544 AFEI submission, 29 March 2017 at paras 92–93.

545 Australian Government response to questions for consultations, 12 May 2017 at p. 14.

546 ACCI response to questions for consultations, 12 May 2017 at paras 46.

547 Ibid at paras 46–47.

548 Australian Government submission, 29 March 2017 at para. 218.

549 Ibid at para. 220; Connolly G, Trott D & Li Y (2012), Workplace agreements and other determinants of labour productivity, paper presented to the 23rd Australian Labour Market Research Workshop.

550 Fair Work Act Review Panel (2012), Towards more productive and equitable workplaces: an evaluation of the Fair Work legislation.

551 New South Wales Government submission, 12 April 2017 at para. 46.

552 Ibid at para. 47.

553 Ibid at para. 42.

554 Queensland Government submission, 13 April 2017 at pp. 11–12.

555 Ibid at p. 12.

556 ACTU submission, 29 March 2017 at para. 82.

557 Ibid at para. 75.

558 Ibid at para. 76.

559 ACCI submission, 29 March 2017 at paras 204–205.

560 Ai Group submission, 29 March 2017 at p. 32.

561 AFEI submission, 29 March 2017 at para. 93.

562 ACTU submission, 29 March 2017 at para. 74.

563 Ibid at para. 81.

564 Australian Government submission, 29 March 2017 at para. 42.

565 Wright S & Buchanan J (2013), Award Reliance, Fair Work Commission Research Report 6/2013, December.

566 South Australian Government submission, 28 March 2017 at para. 23.

567 ACTU submission, 29 March 2017 at para. 90; Fair Work Commission (2015), AWRS First Findings Report.

568 Australian Government submission, 29 March 2017 at p. 6, Chart 2.1, which excludes from the calculation of ‘all employees’ those in Agriculture, forestry and fishing.

569 ACTU Submission, 29 March 2017 at para. 81. The difference in the estimates cited by the ACTU from those cited in the Australian Government submission is the use of “non-managerial employees” by the ACTU and “all employees” by the Australian Government.

570 Australian Government submission, 29 March 2017 at p. 6, Chart 2.1.

571 Bishop J & Cassidy N (2017), Insights into low wage growth in Australia, RBA Bulletin, March Quarter, p. 19.

572 [2014] FWCFB 3500 at para. 472.

573 [2015] FWCFB 3500 at para. 472; [2010] FWAFB 4000 at para. 302; [2011] FWAFB 3400 at para. 281 and [2012] FWAFB 5000 at para. 222.

574 [2015] FWCFB 8200.

575 Ibid at para 290.

576 See [2015] FWCFB 8200 at paras 276–277.

577 [2015] FWCFB 8200 at para. 272.

578 [2017] FWCFB 1001 at para. 215.

579 [2015] FWCFB 8200 at para. 216.

580 [2016] FWCFB 3500 at para. 546.

581 Ibid at paras 547–548.

582 Australian Government submission, 29 March 2017 at para. 273; ABS, Average Weekly Earnings, Nov 2016, Catalogue No. 6302.0.

583 South Australian Government submission, 28 March 2017 at para. 30; Federal opposition submission, 29 March 2017 at para. 34.

584 ACTU submission, 29 March 2017 at para. 443.

585 Ibid at paras 444; 446–447.

586 Ibid at paras 450–451, Figures 75–76.

587 Australian Government submission, 29 March 2017 at para. 275; Rozenbes D & Farmakis-Gamboni S (2015), Earnings and characteristics of employees by gender and industrial arrangement, report for the Pay Equity Unit of the Fair Work Commission, December; and Broadway B & Wilkins R (Melbourne Institute of Applied Economic and Social Research) (2015), Low-paid women’s workforce participation decisions and pay equity,report for the Pay Equity Unit of the Fair Work Commission, December.

588 Australian Government submission, 29 March 2017 at para. 275.

589 Ai Group submission, 29 March 2017 at p. 33; [2016] FWCFB 3500 at paras 562–563; Rozenbes & Farmakis-Gamboni (2015), p. 19.

590 Victorian Government submission, 29 March 2017 at para. 59, Table 6; ABS, Employee Earnings and Hours, Australia, May 2016, Catalogue No. 6306.0.

591 Victorian Government submission, 29 March 2017 at para. 57; Workplace Gender Equality Agency (2016), Australia’s gender equality scorecard: Key findings from the Workplace Gender Equality Agency’s 2015–16 reporting data, November 2016, available at:

592 Victorian Government submission, 29 March 2017 at para. 58; ACTU (2016), The Gender Pay Gap Over the Life Cycle, March.

593 Victorian Government submission, 29 March 2017 at para 64; ABS, Forms of Employment, November 2013, Catalogue No. 6359.0.

594 ACCER submission, 29 March 2017 at para. 227; Wright S & Buchanan J (2013), Award reliance, Research Report 6/2013, Fair Work Commission, December, Table 4.16.

595 ACCER submission, 29 March 2017 at para. 227; Jimenez C & Rozenbes D (2017), Award-reliant workers in the household income distribution, Research Report 1/2017, Fair Work Commission, February, p. 10, Figure 3.

596 Broadway & Wilkins (2015) at p. ii.

597 Victorian Government submission, 29 March 2017 at para. 58; Broadway & Wilkins (2015).

598 Victorian Government submission, 29 March 2017 at para. 32.

599 Including Pointon M, Wheatley T, Ellis G and MacDermott K (2012) Award Reliance and Differences in Earnings by Gender, Research Report 3/2012, Fair Work Australia, February, Melbourne.

600 [2016] FWCFB 3500 at para 575.

601 Broadway & Wilkins (2015) at p. 63.

602 Statistical report, Table 6.15.

603 Bishop J and Cassidy N (2017) Insights into low wages growth in Australia, RBA Bulletin, March Quarter, p. 19.

604 [2016] FWCFB 3500 at para. 573.

605 Ibid at para. 576.

606 ACTU submission, 29 March 2017 at para. 441.

607 Ibid at para. 446.

608 Ibid at para. 453.

609 Victorian Government submission, 29 March 2017 at pars 63–66; citing [2016] FWCFB 3500 at para. 573.

610 South Australian Government submission, 28 March 2017 at para. 30.

611 Ibid at para. 31. Also Queensland Government submission, 13 April 2017 at p. 6.

612 Queensland Government submission, 13 April 2017 at p. 12.

613 ACOSS submission, 29 March 2017 at p. 9.

614 Ibid; Austen S, Jefferson T, Preston A & Seymour R (2008), Gender pay differentials in low paid employment, Women in Social and Economic Research, Curtin University, report commissioned by the Australian Fair Pay Commission, October.

615 Australian Government submission, 29 March 2017 at para. 274.

616 Ibid at para. 9.

617 ACCI submission in reply, 21 April 2017 at para. 52 and Ai Group submission, 29 March 2017 at p. 33.

618 Ibid at para. 56.

619 Ibid at para. 54.

620 ACCER submission, 29 March 2017 at para. 228.

621 Some transitional APCSs may still operate. This includes (but is not limited to) instruments which cover employees: covered by enterprise awards for which an application to modernise has been made; also covered by enterprise awards, also covered by State reference public sector awards; or also covered by the Social, Community, Home Care and Disability Industry Award 2010.

622 Some Division 2A State reference transitional awards may still operate such as where they are related to awards that have not been terminated under the termination of instruments process.

623 Some Division 2B State reference transitional awards may still operate such as where they are related to awards that have not been terminated under the termination of instruments process.

624 Some Division 2B State awards may still operate such as where they cover: employees also covered by enterprise instruments; or State reference public sector awards.

625 Two transitional pay equity orders currently operate, created under item 43 of Sch 3, and item 30A of Sch 3A, of the Transitional Act respectively. The Panel must review and may make a determination varying the transitional pay equity order created under sub item 30D(1) of Sch 3A, to the extent that it is derived from the Queensland Community Services and Crisis Assistance Award – State 2008.

626 See discussion further for whom these instruments apply [2013] FWCFB 4000 at paras 550–561.

627 [2010] FWAFB 4000 at paras 370–396.

628 Dunn A & Bray G (2010), Minimum wage transitional instruments under the Fair Work Act 2009 and the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, Research Report 06/2010, Fair Work Australia, June.

629 [2013] FWCFB 4000 at paras 550–561.

630 [2017] FWCFB 1931 at para. 81.

631 Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, items 5(2) and 9(4) of Sch 6.

632 Transitional Act, items 5(3), 6 and 10(1) of Sch 6A.

633 For example, certain instruments that covered employees who were also covered by the Social, Community, Home Care and Disability Industry Award 2010 were preserved by the [2010] FWAFB 9916 at para. 44. As at the date of this decision, they have not been terminated.

634 A more detailed outline of these instruments can be found at [2013] FWCFB 4000 at paras 553–559; and [2017] FWCFB 1931 at para. 81.

635 Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009, items 10 and 20 of Sch 9, item 12A(6) of Sch 3 and item 30D of Sch 3A.

636 The Fair Work (Transfer of Business) Amendment Act 2012, which commenced on 4 December 2012, introduced Part 6.3 into the Act. A copied State award continues to operate under the national system for a period of five years, unless terminated or extended by regulation. See s.768AO of the Fair Work Act.

637 The provisions of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 dealing with the variation of Division 2B State awards in annual wage reviews also apply to copied State awards. Sections 768BY and 768AW(b) of the Fair Work Act.

638 Transitional Act, item 5–6 of Sch 9, and item 3(2) of Sch 5.

639 [2010] FWAFB 9916 at para. 44.

640 Transitional Act, item 10(1) of Sch 9 and item 12A of Sch 3.

641 [2016] FWCFB 3500 at para. 584.

642 Fair Work Commission (2016), Background Paper Annual Wage Review 2016–17—Transitional instruments. See also Dunn A and Bray G (2010), Minimum wage transitional instruments under the Fair Work Act 2009 and the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, Research Report 06/2010, Fair Work Australia, June.

643 [2017] FWCFB 1931.

644 Ibid at para. 144.

645 Ibid at para. 145.

646 [2016] FWC 2832.

647 [2017] FWCFB 132.

648 [2017] FWCFB 1931 at para. 148.

649 Order – Apprentices’ and Trainees’ Wages and Conditions (Excluding Certain Queensland Government Entities) 2003 and Order – Supply of Tools to Apprentices (Qld) and Order – Supply of Tools to Apprentices (Qld).

650 The third is the Order – Apprentices’ and Trainees’ Wages and Conditions (Queensland Government Departments and Certain Government Entities) 2003.

651 [2017] FWCFB 132.

652 Ibid at paras 64 and 66–68.

653 [2017] FWCFB 1931 at para. 155.

654 Ai Group submission in reply, 13 April 2017 at pp. 29–30.

655 [2017] FWCFB 1931 at para. 147.

656 ABI and NSWBC submission in reply, 13 April 2017 at p. 4.

657 ABI and NSWBC submission, 29 March 2017 at p. 30.

658 PR525485.

659 ABI and NSWBC submission, 29 March 2017 at p. 31.

660 HIA submission, 29 March 2017 at pp. 4–5.

661 ACTU submission in reply, 20 April 2017 at paras 9–11.

662 [2017] FWCFB 1931 at paras 144–147.

663 See [2013] FWCFB 4000 at para. 561; [2014] FWCFB 3500 at para. 572; [2015] FWCFB 3500 at para. 535; and [2016] FWCFB 3500 at para. 592.

664 See [2013] FWCFB 4000 at para. 560; [2014] FWCFB 3500 at para. 572; [2015] FWCFB 3500 at para. 536; and [2016] FWCFB 3500 at para. 593.

665 Transitional Act, item 12A of Sch 3 and items 10 and 20 of Sch 9.

666 Fair Work Act, s.284(3).

667 ACTU submission, 29 March 2017 at para. 457.

668 Ai Group submission, 29 March 2017 at p. 38.

669 ACOSS submission, 29 March 2017 at p. 12.

670 ABI and NSWBC submission, 29 March 2017 at p. 30.

671 Australian Government submission, 29 March 2017 at para. 137; ACCI submission, 29 March 2017 at para. 6; ACOSS submission, 29 March 2017 at p. 34; ARA submission, 29 March 2017 at p. 6; MGA submission, 28 March 2017 at p. 15; Ai Group submission, 29 March 2017 at p. 18; ACTU submission, 29 March 2017 at para. 257.

672 ACTU submission, 29 March 2017 at para. 457.

673 Ai Group submission, 29 March 2017 at p. 38.

674 ACOSS submission, 29 March 2017 at p. 12.

675 ABI and NSWBC submission, 29 March 2017 at p. 30.

676 ACOSS submission, 29 March 2017 at p. 35; HIA submission, 29 March 2017 at p. 4; VACC submission, 29 March 2017 at p. 5.

677 Nelms L, Yuen K, Pung A, Farooqui S and Walsh J (2017), Background and supply side factors affecting commencement and completion of apprentices and traineeships, Fair Work Commission, Research Report 3/2017, Part I, February; and Karmel T (2017), Factors affecting apprenticeships and traineeships, Fair Work Commission, Research Report 3/2017, Part II, February.

678 ACTU submission, 29 March 2017 at para. 461.

679 Ibid at para. 459.

680 Ibid at para. 460.

681 ACOSS submission, 29 March 2017 at p. 36.

682 ACTU submission, 29 March 2017 at para. 465.

683 Ai Group submission, 29 March 2017 at p. 38.

684 ACOSS submission, 29 March 2017 at p. 12.

685 ABI and NSWBC submission, 29 March 2017 at p. 30.

686 See [2016] FWCFB 3500 at paras 608; 650.

687 ACTU submission, 29 March 2017 at para. 468.

688 Ai Group submission, 29 March 2017 at p. 38.

689 Victorian Government submission, 29 March 2017 at para. 49, citing (2016) Victorian Inquiry into the Labour Hire and Insecure Work: Final Report, August, para. 44, < Fair Work Act, s.295(1)(b).

691 [2016] FWCFB 3500 at para. 614.

692 ACTU submission, 29 March 2017 at para. 467.

693 Ai Group submission, 29 March 2017 at p. 42.

694 [2011] FWAFB 3400 at para. 381; [2012] FWAFB 5000 at para. 308; [2013] FWCFB 4000 at para. 586; [2014] FWCFB 3500 at para. 606; [2015] FWCFB 3500 at para. 559; [2016] FWCFB 3500 at para. 616.

695 ACTU submission, 29 March 2017 at para. 467; Ai Group submission, 29 March 2017 at p. 41.

696 [2016] FWCFB 3500 at para. 633.

697 Ibid at para. 635.

698 Ibid at paras 638–640.

699 Ai Group submission, 29 March 2017 at p. 41; ABI and NSWBC submission, 29 March 2017 at p. 30.

700 [2016] FWCFB 3500 at para. 640.

701 ACTU submission, 29 March 2017 at para. 458.

702 ACOSS submission, 29 March 2017 at p. 12.

703 Ai Group submission, 29 March 2017 at p. 39.

704 ABI and NSWBC submission, 29 March 2017 at p. 30.

705 Ai Group submission, 29 March 2017 at p. 40.

706 ABI and NSWBC submission, 29 March 2017 at p. 30.

707 [2016] FWCFB 3500 at para. 652.

708 [2017] FWCFB 1931 at para. 173.

709 MA000103.

710 [2017] FWCFB 1931 at para. 187.

711 Ibid at para. 186.

712 ACTU submission, 29 March 2017 at para. 462.

713 ACOSS submission, 29 March 2017 at p. 12.

714 Ai Group submission, 29 March 2017 at p. 39.

715 ABI and NSWBC submission, 29 March 2017 at p. 30.

716 ACOSS submission to 2015–16 Review at pp. 38–39; ACOSS submission to 2014–15 Review at pp. 52–53; ACOSS submission to 2013–14 Review at pp. 59–60; ACOSS submission to 2012–13 Review at pp. 58–59; ACOSS submission to 2011–12 Review at p. 57; ACOSS submission to 2010–11 Review at pp. 45–46 and ACOSS submission to 2009–10 Review at p. 46.

717 ACOSS submission, 29 March 2017 at p. 37.

718 ACOSS submission to the preliminary hearing, 10 October 2016 at p. 4.

719 ACTU submission, 29 March 2017 at para. 464.

720 Ibid at para. 465.

721 [2017] FWCFB 1931 at para. 186.

722 [2016] FWCFB 3500 at para. 640.

723 [2017] FWCFB 1931.