Annual Wage Review 2023-24 - [2024] FWCFB 3500

[2024] FWCFB 3500

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.285—Annual wage review

Annual Wage Review 2023–24

(C2024/1)

JUSTICE HATCHER, PRESIDENT

VICE PRESIDENT ASBURY
DEPUTY PRESIDENT HAMPTON
DEPUTY PRESIDENT O’NEILL
MS LABINE-ROMAIN
PROFESSOR BAIRD

MR CULLY

SYDNEY, 3 JUNE 2024

Annual Wage Review 2023–24.

Contents

Section		Paragraph
1.	Overview of the decision
1.1Introduction	[1]
1.2The decision	[8]
1.3Structure of this decision	[11]
2.	Scope and effect of the Review
2.1 Employees reliant on the NMW	[14]
2.2 Modern award-reliant employees	[29]
2.3Effect of AWR decisions	[36]
3.	Economic, labour market and business considerations	[40]
3.1Inflation and monetary policy	[41]
3.2Economic growth	[51]
3.3The labour market	[56]
3.4Business conditions and outlook	[62]
3.5Productivity	[68]
4.	Relative living standards and the needs of the low paid	[72]
5.	Gender equality
5.1Gender pay gaps	[85]
5.2Ensuring equal remuneration for work of equal or comparable value and eliminating gender-based undervaluation	[88]
5.3Female participation in the workforce	[130]
6.	Job security	[133]
7.	Collective bargaining	[136]
8.	Consideration
8.1General conclusions	[140]
8.2The NMW	[151]
8.3Modern award minimum wage rates	[154]
8.4The gender equality agenda	[162]
9.	Conclusion	[173]
Appendix: Proposed minimum wage adjustments

Abbreviations and defined terms

Abbreviation / defined term	Definition
AAWI	Average annual wage increase
ABI/BNSW	Australian Business Industrial and Business NSW
ABS	Australian Bureau of Statistics
ACC Award	Aircraft Cabin Crew Award 2020 [MA000047]
ACCI	Australian Chamber of Commerce and Industry
ACT Child Care decision	Application by Australian Liquor, Hospitality and Miscellaneous Workers Union [2005] AIRC 28, PR954938
ACTU	Australian Council of Trade Unions
AENA	Average Earnings National Accounts
Aged Care Award	Aged Care Award 2010 [MA000018]
Ai Group	The Australian Industry Group
ANMF	Australian Nursing and Midwifery Federation
ANMF work value application	Application AM2024/11 by the ANMF to increase wages for all nurses covered by the Nurses Award on work value grounds
ANZSCO	Australian and New Zealand Standard Classification of Occupations
ANZSIC	Australian and New Zealand Standard Industrial Classification
AWOTE	Average weekly ordinary time earnings
AWR 2023 decision	Annual Wage Review 2022–23 [2023] FWCFB 3500, 323 IR 332
C10 Metals Framework Alignment Approach	See definition of MRA
COE	Characteristics of Employment statistics published by the ABS
CPI	Consumer Price Index
CS Award	Children’s Services Award 2010 [MA000120]
ECEC	Early childhood education and care
EEH	Employee Earnings and Hours statistics published by the ABS
ERO	Equal remuneration order PR525485 applicable to social and community service employees under the SCHADS Award; see also [2012] FWAFB 1000, 208 IR 446 and [2012] FWAFB 5184, 223 IR 410
EST Award	Educational Services (Teachers) Award 2020 [MA000077]
FAAA	Flight Attendants’ Association of Australia
FW Act	Fair Work Act 2009 (Cth)
GDP	Gross domestic product
General Retail Award	General Retail Industry Award 2020 [MA000004]
Hair and Beauty Award	Hair and Beauty Industry Award 2020 [MA000005]
HPSS Award	Health Professionals and Support Services Award 2020 [MA000027]
LCI	Employee Living Cost Index
Manufacturing Award	Manufacturing and Associated Industries and Occupations Award 2020 [MA000010]
Metal Industry Award	Metal Industry Award 1984 [AW819234], Print F8925, later the Metal, Engineering and Associated Industries Award, 1998 – Part I [AW789529], Print Q2527
MIHL	Minimum Income for Healthy Living (standard)
Miscellaneous Award	Miscellaneous Award 2020 [MA000104]
MRA	Minimum rate adjustment, a process established by the National Wage Case August 1989 [1989] AIRC 525, 30 IR 81, Print H9100 to align key classifications in awards with classifications in the Metal Industry Award; also known as the ‘C10 Metals Framework Alignment Approach’
NMW	National minimum wage
NMW Report	Josh Tomlinson, Characteristics of employees on the National Minimum Wage (Fair Work Commission Research Report No 1/2024, February 2024)
Nurses Award	Nurses Award 2020 [MA000034]
OECD	Organisation for Economic Co-operation and Development
Pharmacy Award	Pharmacy Industry Award 2020 [MA000012]
PPI	Producer Price Index
RBA	Reserve Bank of Australia
Review	Annual wage review
RNNDI	Real net national disposable income
RSE	Relative standard error
SCHADS Award	Social, Community, Home Care and Disability Services Award 2010 [MA000100]
SDR	Special drawing right
Secure Jobs, Better Pay Act	Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022
Stage 1 Aged Care decision	Aged Care Award 2010; Nurses Award 2020; Social, Community, Home Care and Disability Services Industry Award 2010 [2022] FWCFB 200, 319 IR 127
Stage 1 report	Natasha Cortis et al, UNSW Social Policy Research Centre, Gender-based Occupational Segregation: A National Data Profile (Final Report, 6 November 2023)
Stage 2 report	Fair Work Commission, Stage 2 report — Gender pay equity research — Annual Wage Review 2023–24 (Report, 4 April 2024)
Stage 3 Aged Care decision	Aged Care Award 2010; Nurses Award 2020; Social, Community, Home Care and Disability Services Industry Award 2010 [2024] FWCFB 150
SWS	Supported Wage System
Teachers decision	Application by Independent Education Union of Australia [2021] FWCFB 2051
UWU	United Workers’ Union
WPI	Wage Price Index
Yuen and Tomlinson 2023 Report	Kelvin Yuen and Josh Tomlinson, A profile of employee characteristics across modern awards (Fair Work Commission Research Report No 1/2023, March 2023)

The Annual Wage Review Decision 2023–24

Overview of the decision

1.1 Introduction

Section 285 of the Fair Work Act 2009 (Cth) (FW Act) requires the Fair Work Commission to conduct an annual wage review (Review). An Expert Panel consisting of full-time Commission members and part-time members with expertise in areas relevant to the Review is constituted for the purpose of conducting the Review.

The Review has two main functions. The first is to review, and make, the national minimum wage (NMW) order. The NMW order applies only to persons in the national industrial relations system who are not covered by a modern award or an enterprise agreement. The order sets the NMW and also sets special NMWs for employees who are juniors, trainees and persons with disability and the casual loading for employees who are award/agreement-free.[1] As we explain in section 2 of this decision, the practical application and effect of the NMW is very limited. In last year’s Annual Wage Review 2022–23 decision[2] (AWR 2023 decision), the Expert Panel estimated that only 0.7 per cent of all employees are actually paid the NMW. Further data analysis carried out since that decision suggests that the proportion of the workforce that is paid the NMW in accordance with the FW Act is in fact much smaller.

The second and more significant function is to review modern award minimum wages and consider whether they should be adjusted. There are currently 121 modern awards which set minimum wages, expressed on a yearly, weekly and/or hourly basis, and conditions for a wide range of industries and occupations. Approximately 20.7 per cent of all employees are paid at the applicable minimum wage rates in modern awards and will thereby be directly affected by this decision. As was found in the AWR 2023 decision,[3] the characteristics of this cohort of employees are significantly different to those of the workforce as a whole: they predominantly work part-time hours and are female; almost half are casual employees; and compared to the general workforce they are disproportionately low paid, paid junior rates and employed by a small business. Primarily because of the part-time and low paid characteristics of the modern award-reliant cohort, the wages paid to them constitute less than 11 per cent of the national ‘wage bill’. The AWR 2023 decision[4] awarded an increase of 5.75 per cent to modern award minimum wages, which was significantly higher than the general rate of wages growth for the workforce as a whole, albeit still less than the rate of inflation at the time. However, this increase only accounted for approximately 15 per cent of wages growth across the entire workforce for the year to March 2024.

Accordingly, the direct effect of the Review on wages growth for the Australian workforce, considered in aggregate, is limited. However, its effect in particular sectors which are significantly more award-reliant is more marked. For example, the four sectors with the highest numbers of award-reliant employees, namely Accommodation and food services, Health care and social assistance, Retail trade and Administrative and support services,[5] account for over 65 per cent of all modern award-reliant employees, and 10 out of the total of 121 modern awards apply to over 63 per cent of all modern award-reliant employees.[6] In other sectors such as Mining, award reliance is negligible.[7]

The Review is required to be conducted in accordance with the statutory framework of the FW Act. In particular, it is necessary for us to take into account the considerations specified in the ‘minimum wages objective’ in s 284(1) of the FW Act and, in relation to modern award minimum wages, the ‘modern awards objective’ in s 134(1). These considerations include, among other things, the performance and competitiveness of the national economy, the need to achieve gender equality, promoting social inclusion through increased workforce participation, and relative living standards and the needs of the low paid. In considering these matters, we have taken into account data available up to 28 May 2024.

The relevant aspects of the statutory framework including ss 134(1) and 284(1), and the principles concerning their application, were the subject of detailed analysis in the AWR 2023 decision.[8] We adopt that analysis for the purpose of this decision. It is not necessary to repeat the conclusions of that analysis save to say that the discharge of the Commission’s functions in the Review is an evaluative exercise requiring a complex balancing of the prescribed and other relevant considerations, rather than any mechanistic approach.[9]

In our conduct of this Review, we have received and considered written submissions from a wide range of interested parties including the peak councils — the Australian Chamber of Commerce and Industry (ACCI), the Australian Council of Trade Unions (ACTU), the Australian Industry Group (Ai Group) and the Council of Small Business Organisations Australia — registered unions and employer organisations, other employer and employee interest groups, and the Australian Government and State governments. We also conducted a hearing on 22 May 2024 at which parties were given the opportunity to make oral submissions and answer questions from the Expert Panel. In a number of parties’ submissions, specific proposals have been advanced as to the quantum of the wage adjustments we should order in this Review. These are summarised in the appendix to this decision. We have taken these proposals into consideration. However, as was stated in the AWR 2023 decision,[10] it is necessary to emphasise that the Review process is not one of adjudication between competing proposals. Rather, our statutory task is to make our own assessment of what constitutes a safety net of fair minimum wages having regard to the prescribed and other relevant considerations.

1.2 The decision

We have decided to increase the National Minimum Wage and all modern award minimum wage rates by 3.75 per cent, effective from 1 July 2024. In determining this level of increase, a primary consideration has been the cost-of-living pressures that modern award-reliant employees, particularly those who are low paid and live in low-income households, continue to experience notwithstanding that inflation is considerably lower than it was at the time of last year’s Review. Modern award minimum wages remain, in real terms, lower than they were five years ago, notwithstanding last year’s increase of 5.75 per cent, and employee households reliant on award wages are undergoing financial stress as a result. This has militated against this Review resulting in any further reduction in real award wage rates. At the same time, we consider that it is not appropriate at this time to increase award wages by any amount significantly above the inflation rate, principally because labour productivity is no higher than it was four years ago and productivity growth has only recently returned to positive territory. We have taken into account that the labour market and business profit growth overall remain strong, but the picture is less positive in some of the industry sectors which contain a large proportion of modern award-reliant employees. We have also taken into account that modern award-reliant employees will shortly receive the benefit of the Stage 3 tax cuts and the Budget cost-of-living measures, which are projected to increase real household disposable incomes over the next 12 months. We have treated the forthcoming increase to the Superannuation Guarantee contribution amount as a moderating factor.

The increase of 3.75 per cent which we have determined is broadly in line with forecast wages growth across the economy in 2024 and will make only a modest contribution to the total amount of wages growth in 2024. We consider therefore that this increase is consistent with the forecast return of the inflation rate to below 3 per cent in 2025.

We have also determined to establish a program for the timely resolution of gender undervaluation issues arising in respect of certain modern awards. A gender equity research project which was undertaken following the decision in last year’s Review has now been completed, and this has permitted us to identify priority areas for attention. Modern awards and classifications applicable to early childhood education and care workers, disability home care workers and other social and community services workers, dental assistants, medical technicians, psychologists, other health professionals and pharmacists will be the subject of Commission-initiated proceedings to examine and address gender undervaluation. These proceedings will commence shortly after the issue of this decision and we intend that they will be completed by the time of next year’s Review, which will then move on to the consideration of other gender undervaluation issues.

1.3 Structure of this decision

This decision is structured in the following way. In section 2 of the decision, we make some observations about the practical scope and effect of annual wage reviews and this decision. In sections 3–7, we deal with the mandatory considerations in ss 134(1) and 284(1) of the FW Act grouped into the following categories:

3.Economic, labour market and business considerations: ss 134(1)(c), (d), (f) and (h); ss 284(1)(a) and (b).
4.Relative living standards and the needs of the low paid: s 134(1)(a); s 284(1)(c).
5.Gender equality: s 134(1)(ab); s 284(1)(aa).

6.Job security: s 134(1)(aa).

7.Collective bargaining: s 134(1)(b).

The consideration in s 134(1)(da) concerns the need to provide for additional remuneration by way of penalty rates and loadings for work performed in particular circumstances. The consideration in s 134(1)(g) concerns the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards. We do not think either of these is relevant to the Review and we give them neutral weight in our consideration.

In section 8 we set out our reasons for the outcomes we have determined in this Review. This includes our consideration concerning s 284(1)(e), which requires us to take into account the provision of a comprehensive range of fair minimum wages to junior employees, employees to whom training arrangements apply and employees with a disability. Section 9 sets out a summary of orders and determinations we intend to make. Finally, the appendix contains a summary of the proposed minimum wages adjustments, if any, proposed by parties in their submissions.

Scope and effect of the Review

2.1 Employees reliant on the NMW

In the AWR 2023 decision, it was estimated that 0.7 per cent of the Australian employee workforce is reliant on the NMW — that is, the NMW sets their actual rate of pay — and thus would be directly affected by any adjustment made to the NMW. This estimate was taken from a submission made by the Australian Government that approximately 79,200 employees are NMW-reliant.[11] However, we consider that this estimate now requires significant downward revision.

Section 294(3) of the FW Act provides that the NMW which is set by the national minimum wage order applies to ‘all award/agreement free employees’ who are not junior employees, employees to whom training arrangements apply, or employees with a disability. Section 12 provides that an ‘award/agreement free employee’ is a national system employee to whom neither a modern award nor an enterprise agreement applies. A modern award includes a modern enterprise award and a State reference public sector modern award. A modern award ‘applies’ to an employee if it ‘covers’ the employee, is in operation, and no other provision of the FW Act provides that the award does not apply to the employee (s 47(1)). A modern award ‘covers’ an employee if the award is expressed to cover the employee (s 48(1)). The FW Act relevantly provides that an award will not apply to an employee who is covered by the award if:

· the employee is a ‘high income employee’ (currently, an employee who has a guarantee of annual earnings exceeding $167,500 on a full-time basis):[12] s 47(2); or

· an enterprise agreement applies to the employee’s employment at the relevant time: s 57(1).

There are currently 120 modern awards in operation which cover a wide range of specified industries and occupations. The classifications in these awards generally capture all employees up to the supervisory or sub-managerial level, and in some cases cover professional and lower-level managerial employees. In addition, the Miscellaneous Award 2020[13] (as varied effective from 1 July 2020) (Miscellaneous Award) covers employers throughout Australia and their employees in the classifications for which the award provides who are not covered by any other modern award (clause 4.1), except, relevantly, for:

(1)managerial employees and professional employees such as accountants and finance, marketing, legal, human resources, public relations and information technology specialists (clause 4.2); and

(2)employees excluded from award coverage by the FW Act (clause 4.3).

The classifications in the Miscellaneous Award cover entry-level employees in the first three months of employment (Level 1), employees without specified qualifications generally (Level 2), trade-level employees (Level 3) and employees with advanced trade qualifications or sub-professional employees (Level 4). The lowest minimum rate in the award is currently $859.30 per week ($22.61 per hour) and the highest is $1085.60 per week ($28.57 per hour).

In relation to the second category of exception from the coverage of the Miscellaneous Award, s143(7) of the FW Act provides:

Employees not traditionally covered by awards etc.

(7) A modern award must not be expressed to cover classes of employees:

(a) who, because of the nature or seniority of their role, have traditionally not been covered by awards (whether made under laws of the Commonwealth or the States); or

(b) who perform work that is not of a similar nature to work that has traditionally been regulated by such awards.

Note: For example, in some industries, managerial employees have traditionally not been covered by awards.

Employees who are ‘award/agreement free’ under the FW Act, and to whom the NMW may therefore apply, are therefore likely to consist of employees in three categories. The first category is those who are ‘high income employees’ exempted under s 47(2). However, by definition, such employees do not rely on the NMW to set their actual rate of pay.

The second category consists of those managerial and professional employees who are not covered by any of the 120 industry or occupational awards and do not fall within the coverage of the Miscellaneous Award because they do not fall within any of the classifications in that award and/or because they fall within the exemption in clause 4.2. However, due to the typical pay levels of employees in this category, it is in practical terms highly unlikely that they encompass anybody who is NMW-reliant.

The third category consists of those who are not covered by any modern award, including the Miscellaneous Award, because they fall within the prohibition on award coverage in s 143(7). It is theoretically possible that this category includes low paid employees who are NMW-reliant but who have not traditionally been covered by awards. The difficulty is, as observed in the AWR 2023 decision, that no party has been able to identify any actual occupation or industry in which employees in this category are employed. The State and federal arbitral systems in Australia have traditionally set award wages for all categories of low paid employees, and the exclusion in s 143(7) would appear to have little or no application to low paid employees unless there is some recently-emerged new low paid occupation of which we are unaware.

As stated above, the Australian Government submitted in last year’s Review that, based on the results of the Employee Earnings and Hours (EEH) survey conducted by the Australian Bureau of Statistics (ABS) in May 2021, approximately 0.7 per cent of the workforce is NMW-reliant. EEH data is drawn from a survey of employers concerning employee earnings and hours that is conducted biennially in May. The published EEH statistics do not actually identify the number of employees, or the proportion of the workforce, to whom the NMW applies and who are paid the NMW rate. The Australian Government’s submission in this respect appears to have been founded on an inference that, in the survey for May 2021, where an employer responded in respect of an employee that the employee’s pay was not set by a collective agreement or an award but rather by ‘an individual agreement or individual contract’, and the employee was paid an ordinary-time amount which approximated the amount of the NMW, the employee was a NMW-reliant employee.[14]

One difficulty with this inference is that, while a respondent employer may reasonably be presumed to know whether a collective agreement of an enterprise-specific nature applies to an employee, it is less safe to assume that the employer will know whether any modern award applies to an employee. Award coverage and application is determined by the combined legal operation of the provisions of the FW Act referred to above and the coverage and classification provisions of relevant modern awards. It is not a matter of employer opinion or choice (absent an employer decision to enter into a collective agreement). Therefore, the fact an employer’s survey response indicates that an employee’s pay is not set by an award does not necessarily mean that a modern award does not ‘apply’ to the employee within the meaning of the FW Act such as to make the NMW applicable.

A research report undertaken by the Commission for the purpose of this Review[15] (NMW Report) has examined the microdata from the May 2021 EEH survey to identify, among other things, the characteristics of ‘employees who do not have their earnings set by an award or a collective agreement and are earning the NMW’.[16] Relevantly, this included their industry and occupational characteristics. The analysis of the EEH microdata in the NMW Report disclosed that the most common industries and occupations in which such employees were employed were as set out below.

Table 1: Most common industry subdivisions and major occupations across NMW employees on an individual arrangement

Industry subdivision:	%
Food and beverage services	20.8*
Personal and other services	9.7*
Professional, scientific and technical services (except computer system design and related services)	8.0*
Other store-based retailing	7.8*
Construction services	7.2*
Adult, community and other education	6.6*
Administrative services	3.7*
Sports and recreation activities	1.5*
Rental and hiring services (except real estate)	1.0*
Occupation sub-major group:
General Clerical Workers	10.1
Sales Assistants and Salespersons	7.1*
Other Labourers	6.8*
Numerical Clerks	5.3*
Sports and Personal Service Workers	4.9**
Cleaners and Laundry Workers	4.8*
Inquiry Clerks and Receptionists	2.8*

Note: * Estimate has a relative standard error (RSE) of between 25 per cent and 50 per cent and should be interpreted with caution. ** Estimate has a RSE of greater than 50 per cent and is considered too unreliable for general use. Hourly earnings are adjusted for casual loading, such that those receiving a casual loading have their earnings lowered in line with the magnitude of the 25 per cent casual loading.

Source: NMW Report Table C1.

It is important to note that Table 1 is concerned with employees paid at or around the NMW who, according to the May 2021 EEH survey responses, were on ‘individual arrangements’. As far as we can identify, all of the industries and occupations identified in Table 1 are, in respect of national system employees, the subject of comprehensive modern award coverage (except, in some cases, with respect to managerial and professional employees). There is no indication in Table 1 of any ‘emerging’ industry or occupation not traditionally covered by awards. Accordingly, this data tends to indicate that (at least) a substantial proportion of employer EEH survey responses identifying employees paid at around the NMW rate as not having their pay set by an award are likely to be incorrect. It is possible that what this data discloses instead is award non-compliance.

The NMW Report also considered whether there are new and emerging occupations which may fall into gaps in award coverage and, by reference to National Skills Commission data published in 2020, identified Solar Installers, Social Media Specialists and Hazardous Materials Labourers (with employment estimates for each at 6,000, 11,000, and 2,000 employees for 2019, respectively) as the lowest paid new and emerging occupations. At least in respect of Solar Installers and Hazardous Material Labourers, without stating any definitive conclusion, we consider it likely that they are covered by modern awards. In any event, the NMW Report states that these three occupations have weekly earnings well above the NMW, and thus they cannot be NMW-reliant. This is consistent with their non-appearance in Table 1.

In its submissions to this Review, the Australian Government estimates on the basis of the May 2023 EEH statistics that there are 32,100 employees (representing about 0.25 per cent of the entire employee workforce) who are NMW-reliant.[17] The methodology for this is not expressly stated but we assume it is the same as for the Government’s 2023 submission. No explanation is suggested for the very large drop (almost 60 per cent) in the estimated number of NMW-reliant employees in the space of only two years.

Having regard to the industry and occupational characteristics data in the NMW Report and the inability of any party to identify any occupation or industry in which NMW-reliant employees are employed, our conclusion in the absence of any evidence to the contrary is that the number of NMW-reliant employees is much lower than the Australian Government estimates (including its current estimate based on the May 2023 EEH statistics) and is likely to be very small. The upshot of this is that the NMW has very limited practical effect in the Australian industrial relations landscape notwithstanding its role in the statutory annual wage review scheme.[18] We discuss the implications of this conclusion later in this decision.

2.2 Modern award-reliant employees

The May 2021 EEH data, referred to in the AWR 2023 decision, showed that 23.0 per cent of the employee workforce was award-reliant — that is, paid in accordance with the minimum rate in an applicable federal or State award. Of this, it was calculated that 20.5 per cent of the workforce was modern award-reliant.[19] The May 2023 EEH data showed that the award-reliant proportion of the workforce had increased slightly to 23.2 per cent. It is not possible to calculate the proportion of modern award-reliant employees (that is, those under federal awards) from the May 2023 EEH statistics because the microdata will not be released until after the date of this decision. However, an estimate of about 20.7 per cent of the workforce as being modern award-reliant (in line with the increase to the total of all award-reliant employees) appears to be sound.

The AWR 2023 decision[20] contained an analysis of the composition and characteristics of the modern award-reliant workforce based on the May 2021 EEH data. In summary, modern award-reliant employees:

·are predominantly female (58.1 per cent);
·predominantly work part-time hours (65.2 per cent);
·are disproportionately casual employees (49.7 per cent), with almost half (48.3 per cent) of all casual employees in the workforce being modern award-reliant;
·are younger (34.8 years average age) than the workforce as a whole (40.1 years);
·are more likely to be employed by a small business (35.6 per cent) than for the workforce as a whole (25.7 per cent); and
·are more likely to be low paid (36.1 per cent) than for the workforce as a whole (12.1 per cent), and their average hourly wage ($28.60) is significantly lower than for the rest of the workforce ($46.20).

The 2023 EEH statistics contain the equivalent compositional data for all award-reliant employees but, again, it is not yet possible to obtain the data for modern award-reliant employees because the microdata is not yet available. However, two significant changes in the available data may be identified. First, the proportion of all award-reliant employees who work part-time hours has increased from 62.6 per cent in May 2021 to 66.7 per cent in 2023.[21] Second, the proportion of casual employees has increased from 45.5 per cent to 48.3 per cent over the same period.[22] Since State awards are primarily ‘paid rates’ public sector awards, we consider that this very significant growth in the proportion of employees working part-time hours and casual employees is likely to have principally occurred amongst employees under federal modern awards.

Almost two-thirds of all modern award-reliant employees are covered by 10 modern awards, namely:

·General Retail Industry Award 2020[23] (General Retail Award): 11.0 per cent.
·Social, Community, Home Care and Disability Services Award 2010[24] (SCHADS Award): 10.5 per cent.
·Hospitality Industry (General) Award 2020:[25] 9.5 per cent.
·Fast Food Industry Award 2020:[26] 7.9 per cent.
·Restaurant Industry Award 2020:[27] 5.4 per cent.
·Children’s Services Award 2010[28] (CS Award): 4.8 per cent.
·Clerks—Private Sector Award 2020:[29] 3.9 per cent.
·Health Professionals and Support Services Award 2020[30] (HPSS Award): 3.8 per cent.
·Vehicle Repair, Services and Retail Award 2020:[31] 3.5 per cent.
·Cleaning Services Award 2020:[32] 3.2 per cent.[33]

The proportion of employees within each industry division which is modern award-reliant varies greatly. In seven industry divisions, more than 20 per cent of employees are modern award-reliant:

·Accommodation and food services: 59.6 per cent.
·Administrative and support services: 42.3 per cent.
·Other services: 36.4 per cent.
·Retail trade: 29.5 per cent.
·Arts and recreation services: 25.9 per cent.
·Health care and social assistance: 23.0 per cent.
·Rental, hiring and real estate services: 21.4 per cent.

At the other end of the scale, only about 1.1 per cent of employees in Mining are modern award-reliant. The above data indicates that particular consideration must be given to the circumstances of industry sectors which are, by proportion or number of employees, highly modern award-reliant.[34] The four industry sectors which contain the largest proportions of all modern award-reliant employees are Accommodation and food services (21.6 per cent), Health care and social assistance (17.1 per cent), Retail trade (14 per cent) and Administrative and support services (13.2 per cent).[35] These sectors therefore account for almost two-thirds of all modern award-reliant employees.

This section of the decision describes those employees, and their employers, who are directly affected by annual wage review decisions. In addition, there are other categories of employees and employers who are indirectly affected because they have wage rates linked to annual wage review decisions by various mechanisms.[36] The most notable of these are enterprise agreements which provide for wage increases in line with annual wage review outcomes. The Australian Government submission identifies that 74,079 employees (representing approximately 0.6 per cent of the employee workforce) are covered by agreements of this nature.[37] We note that, after this submission was filed, the Coles Retail Enterprise Agreement 2024 was approved by the Commission on 3 May 2024.[38] This agreement, which will take effect on 4 October 2024, provides for pay increases in line with annual wage review decisions and covers over 92,000 employees.

2.3 Effect of AWR decisions

Because approximately two-thirds of the modern award-reliant workforce works part-time hours, and the modern award-reliant workforce is disproportionately low paid, the direct effect of AWR decisions on aggregate national labour costs and wages growth is limited. In the AWR 2023 decision,[39] the contribution of the wages of modern award-reliant employees to the economy-wide aggregate wage bill, based on the May 2021 EEH data, was estimated to be 11.2 per cent. This figure has been recalculated, based on the May 2023 EEH data, to be 10.6 per cent for 2023.

Table 2: Award-dependent wages in the total economy, modern award-reliant employees, 2023

Number	Share total (%)	Share GDP (%)
Workers covered by modern awards (millions, 2023)	2.60	20.7*	-
Average wage, modern award-reliant employees ($ per week, 2023)	762.6	51.2	-
Wage bill covered by modern award-reliant employees ($billion per year, 2023)	103.2	10.6	-
Total compensation covered by modern award-reliant employees ($billion per year)	128.0	-	4.9

Note: Total compensation of employees and gross domestic product (GDP) is based on the June quarter 2023, annualised, as per Greg Jericho and Jim Stanford, ‘The Irrelevance of Minimum Wages to Future Inflation’ (Briefing Paper, Centre for Future Work, The Australia Institute, March 2024).*Same proportion of modern award-reliant to total award-reliant employees applied from 2021 as number of modern award-reliant employees is not yet known for 2023.

Source: Information note—Award-dependent wages in the economy, Fair Work Commission additional material for the Annual Wage Review 2023–24, 16 April 2024.

The ABS Wage Price Index (WPI) data available at the time of the AWR 2023 decision indicated that the contribution of award wage increases, including the outcome of the 2022 annual wage review decision,[40] to the total increase (original) to the WPI for the 12 months to the March quarter 2023 was 8.1 per cent.[41] In the ABS WPI release for the September quarter 2023, released on 15 November 2023, the ABS advised that it had adjusted its methodology for calculating the analytical series ‘Contribution to wages growth by method of setting pay’. The result of this was that the revised series provided for ‘an increased contribution to Awards jobs, most notably in the September quarters when Award wages are typically adjusted based on decisions by the Fair Work Commission’,[42] with offsetting decreases in the size of the contributions of Enterprise Agreements and Individual Agreements to the WPI. Based on the revised analytical series, the figure for the award contribution to the WPI increase for the four quarters to the March quarter 2023 was 16.0 per cent.[43] We note that this represents the contribution for all awards, including State awards, and therefore does not solely represent the contribution of the 2022 Review decision.

Table 3 shows the contributions to WPI by method of setting pay for the 12 months to the March quarter 2024.

Table 3: Contributions to the WPI, by method of setting

Quarter	Enterprise agreement (%)	Individual arrangement (%)	Award (%)	Total increase (original) (%)	Total increase (seasonally adjusted) (%)
June 2023	0.22	0.35	0.00	0.6	1.0
September 2023	0.66	0.74	0.63	1.9	1.2
December 2023	0.45	0.39	0.12	0.9	1.0
March 2024	0.21	0.34	0.02	0.6	0.8
Sum over year	1.54	1.82	0.77	4.1	4.1

Source: Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Table 5.3; ABS, ‘Wage Price Index, Australia — March 2024’ (15 May 2024).

The AWR 2023 decision increased all minimum wage rates in modern awards by 5.75 per cent effective from 1 July 2023. In addition to this, a 15 per cent interim pay increase for direct care staff in the aged care sector arising from separate work value proceedings took effect on 30 June 2023. The combined effect of these two decisions is shown in the award contribution for the September quarter 2023 of 0.63 per cent. This constituted 15.3 per cent of the total increase (original) to the WPI for the four quarters to March 2024. The contribution of the AWR 2023 decision was therefore slightly less than this.

Economic, labour market and business considerations

The current economic circumstances which have priority in our consideration in this year’s Review include a rate of inflation that remains above the Reserve Bank of Australia’s (RBA’s) target range of 2–3 per cent, the RBA’s policy response to this by way of a progressive tightening of monetary policy, the effect this policy response is likely to have for economic growth and labour markets, and the uncertain outlook for productivity growth. We set out in this section of the decision the economic, labour market and business circumstances which we consider to be of primary relevance to the considerations in ss 134(1)(c), (d), (f) and (h) and ss 284(1)(a) and (b) of the FW Act.

3.1 Inflation and monetary policy

Inflation has eased considerably since the time of last year’s annual wage review but remains the most significant challenge currently facing the Australian economy. The headline Consumer Price Index (CPI) rate for the 12 months to the March quarter 2024 was 3.6 per cent, down from 7.0 per cent for the equivalent period last year. The March quarter 2024 CPI increase was 1.0 per cent, which was higher than expected and represented an increase from the December quarter 2023 result of 0.6 per cent. The trimmed mean, which measures underlying inflation, remains higher at 4.0 per cent annually, down from a revised 6.5 per cent 12 months ago. The Employee Living Cost Index (LCI), which unlike the CPI takes into account changes in mortgage interest rates, has increased at a significantly higher rate — 6.5 per cent — than the CPI for the 12 months to the March quarter 2024. The equivalent figure 12 months ago was 9.6 per cent.

Table 4: CPI, underlying inflation, LCI for employee households, index and growth rate over the year

Quarter	CPI (% change)	Trimmed mean (% change)	Weighted median (% change)	Employee LCI (% change)
Mar-14	2.9	2.7	2.4	2.1
Mar-15	1.3	2.3	2.4	0.9
Mar-16	1.3	1.7	1.5	1.1
Mar-17	2.1	1.7	1.6	1.5
Mar-18	1.9	1.7	2.0	2.0
Mar-19	1.3	1.6	1.5	1.4
Mar-20	2.2	1.7	1.6	1.1
Mar-21	1.1	1.1	1.2	0.0
Mar-22	5.1	3.8	3.5	3.8
Mar-23	7.0	6.5	5.9	9.6
Mar-24	3.6	4.0	4.4	6.5

Note: CPI and LCI data are expressed in original terms. Percentage change is calculated in relation to the corresponding quarter in the previous year. Source: ABS, ‘Consumer Price Index, Australia — March Quarter 2024’ (24 April 2024); ABS, ‘Selected Living Cost Indexes, Australia — March 2024’, (1 May 2024).

The CPI subgroup which makes the highest contribution to the CPI is Housing, at 21.7 per cent of the total.[44] The cost of rental accommodation, which is included in the Housing subgroup, increased by 7.8 per cent in the 12 months to the March quarter 2024. This was the highest rate of increase since 2009 and was the main contributor to the annual rise in the Housing subgroup. Services inflation (4.3 per cent) is now higher than goods inflation (3.1 per cent), a reversal of the position of 12 months ago, but both have reduced. Annual inflation for non-tradables was 5.0 per cent for the 12 months to the March quarter 2024 and 0.9 per cent for tradables, compared to 7.5 and 6.1 per cent respectively for 2022–23.[45] This indicates that the principal driver of the inflation rate has switched from international to domestic factors over that period.

The Producer Price Index (PPI), which measures the change in prices received by domestic producers for their output, rose 4.3 per cent in the 12 months to the March quarter 2024, compared to a revised 4.9 per cent for the equivalent period last year.

The policy response of the RBA to a rate of inflation which has been above its target range since mid-2021 has been to significantly increase interest rates beginning in May 2022. There have now been 13 consecutive interest rate increases, the most recent being in November 2023.

Table 5: Interest rate decisions

Effective date	Cash rate — %	Change — % points
8 November 2023	4.35	+0.25
7 June 2023	4.10	+0.25
3 May 2023	3.85	+0.25
8 March 2023	3.60	+0.25
8 February 2023	3.35	+0.25
7 December 2022	3.10	+0.25
2 November 2022	2.85	+0.25
5 October 2022	2.60	+0.25
7 September 2022	2.35	+0.50
3 August 2022	1.85	+0.50
6 July 2022	1.35	+0.50
8 June 2022	0.85	+0.50
4 May 2022	0.35	+0.25
6 April 2022	0.10	0.00

Source: ‘Cash Rate Target’, Reserve Bank of Australia (Web Page).

In its May 2024 Statement on Monetary Policy, released before the 2024–25 Budget, the RBA revised its CPI forecasts upward in light of the higher than expected CPI result for the March quarter 2024 and a stronger than expected labour market (which we discuss further below). It does not project inflation to fall within its target band until the second half of 2025, with no fall in CPI inflation occurring this calendar year. The RBA forecasts do not incorporate any effect of the Budget’s cost-of-living relief measures on inflation.

Table 6: RBA inflation forecasts

Year ended
Jun 2024	Dec 2024	Jun 2025	Dec 2025	Jun 2026
CPI Inflation (previous)	3.8 (3.3)	3.8 (3.2)	3.2 (3.1)	2.8 (2.8)	2.6 (2.6)
Trimmed mean inflation (previous)	3.8 (3.6)	3.4 (3.1)	3.1 (3.0)	2.8 (2.8)	2.6 (2.6)

Source: Reserve Bank of Australia, Statement on Monetary Policy (May 2024). ‘Previous’ refers to forecasts made in the RBA’s February 2024 Statement.

The RBA’s assessment concerning future inflation and interest rates is as follows:

Inflation is expected to be higher in the near term than anticipated at the time of the February Statement. Services inflation has declined by a little less than expected, the labour market is assessed as being tighter than previously thought and the outlook for the labour market is slightly stronger. Higher petrol prices and the legislated end of energy rebates will also lift headline inflation in the near term.

The forecasts assume that the cash rate is higher for longer. The staff forecasts are conditioned on the assumption that the cash rate target remains around its current level until mid-2025 before gradually declining over the remainder of the forecast period. This path is about ½ percentage point higher from 2025 onwards than in the February Statement.[46]

However, the RBA has not ruled out at least one further interest rate increase:

The outlook remains uncertain. The path of inflation on its return to target is unlikely to be smooth. The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out. The Board will rely upon the data and the evolving assessment of risks and remain vigilant to the risks of inflation remaining too high.
. . .
Market participants revised up cash rate expectations in response to stronger-than-expected Australian inflation and labour market data. Market pricing implies there is some chance of one more rate increase in Australia this year, with no reduction in the cash rate expected until 2025. Indeed, market participants expect policy to be eased more gradually and noticeably later than previously anticipated.[47]

In the Budget, the Australian Government announced a range of measures to mitigate increases to the cost of living. The Government had previously legislated for modified ‘Stage 3’ tax cuts via the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024 which, effective from 1 July 2024, will reduce the 19 per cent tax rate to 16 per cent and the 32.5 per cent rate to 30 per cent and increase the annual income threshold for the 37 per cent rate from $120,000 to $135,000 and for the 45 per cent rate from $180,000 to $190,000.[48] The Budget announcement of principal significance to inflation is the energy rebate, whereby a rebate on electricity bills of $300 for households and $325 for small businesses will operate from 1 July 2024. In addition, the Budget increases the maximum rate of Commonwealth Rent Assistance by 10 per cent. These two measures are expected to directly reduce the CPI by around a half percentage point over 2024–25.

Taking this into account, the Budget’s forecasts for inflation are significantly lower than those of the RBA:

Table 7: Budget inflation forecasts

2023–24	2024–25	2025–26
Consumer price index		3½%	2¾%	2¾%

Source: Commonwealth of Australia, Budget 2024–25: Budget Strategy and Outlook (Budget Paper No. 1, 14 May 2024) Table 2.2.

However, the Budget identifies ‘substantial risks to the domestic outlook’ including that inflation could prove more persistent than forecast, with possible implications for policy settings and growth, and that if productivity does not pick up as expected, price pressures may be more persistent, with potential implications for unemployment and the real economy.[49]

3.2 Economic growth

Economic growth has slowed, principally as a result of subdued domestic demand in response to rising interest rates and the higher cost of living. The National Accounts for the December quarter 2023 show that GDP grew by 0.2 per cent for the quarter and by 1.5 per cent over the calendar year 2023, compared to 2.4 per cent for 2022. Due to high population growth, per capita GDP actually declined in 2023 by 1.0 per cent. Real net national disposable income (RNNDI) rose by 1.6 per cent over the year, but fell by 0.9 per cent on a per capita basis.

Table 8: Key national accounts aggregate, percentage changes

Quarter					Year
Sep–Dec 2022	Dec 2022 – Mar 2023	Mar–Jun 2023	Jun–Sep 2023	Sep–Dec 2023	Dec 2022 – Dec 2023
GDP	0.8	0.6	0.5	0.3	0.2	1.5
GDP per capita	0.3	-	-0.2	-0.5	-0.3	-1.0
Gross value added market sector	0.6	0.7	0.6	0.1	0.1	1.5
Real net national disposable income	0.6	1.6	-0.9	-0.5	1.4	1.6
Real net national disposable income per capita	0.1	1.0	-1.5	-1.2	0.8	-0.9

Source: ABS, ‘Australian National Accounts: National Income, Expenditure and Product — December 2023’ (6 March 2024).

The primary contributors to economic growth in 2023 were government expenditure, exports and non-mining investment. Household consumption was subdued, reflecting the effect of monetary policy on discretionary expenditure.

Chart 1: Contributions to GDP growth, year ended December 2023

Source: ABS, ‘Australian National Accounts: National Income, Expenditure and Product — December 2023’ (6 March 2024); RBA, Chart Pack, Contributions to GDP Growth, 2023.

Annual growth in 2023 varied greatly amongst the most modern award-reliant industry sectors. There was strong growth in Health care and social assistance, weak growth in Administrative and support services, and Accommodation and food services and Retail trade both contracted.

Chart 2: Change in gross value added by industry, December quarter 2023

Source: Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Chart 1.4; ABS, ‘Australian National Accounts: National Income, Expenditure and Product — December 2023’ (6 March 2024).

The RBA forecasts weak economic growth, with subdued household consumption for the balance of the calendar year. It sees higher growth and consumption in 2025 as growth in real incomes supports increases in household spending. The Budget forecasts are broadly comparable, with growth to remain subdued, but with a recovery in household consumption supported over the next financial year by higher wages growth, the forecast moderation in inflation, continuing employment growth and the Stage 3 tax cuts. It identifies recent strength in business investment, net exports and public investment as also supporting economic growth.[50]

Table 9: RBA and budget forecasts of growth rates in GDP and household consumption

June 2024	Dec 2024	June 2025	Dec 2025	June 2026
Gross domestic product RBA Budget	1.2 1¾	1.6	2.1 2	2.3	2.4 2¼
Household consumption RBA Budget	0.1 ¼	1.3	2.6 2	2.8	2.7 2¾

June 2024

Dec 2024

June 2025

Dec 2025

June 2026

Gross domestic product

RBA
Budget

1.2
1¾

1.6

2.1
2

2.3

2.4
2¼

Household consumption

RBA
Budget

0.1
¼

1.3

2.6
2

2.8

2.7
2¾

Source: Commonwealth of Australia, Budget 2024–25: Budget Strategy and Outlook (Budget Paper No. 1, 14 May 2024) 53; Reserve Bank of Australia, Statement on Monetary Policy (May 2024) 51.

The International Monetary Fund forecasts 1.5 per cent growth for 2024 and 2.0 per cent for 2025.[51]

3.3 The labour market

The labour market has slightly weakened since last year’s annual wage review, but has remained resilient over the course of 2023–24 notwithstanding further tightening in monetary policy and weakened economic growth. Seasonally adjusted, the unemployment rate for April 2024 increased slightly to 4.1 per cent, but employment growth remains strong. Employment increased by 2.8 per cent over the year, but hours worked were 0.8 per cent lower across the year. The underemployment rate is 6.6 per cent, higher than last year’s 6.2 per cent (revised). The participation rate remains at a near-historic high of 66.7 per cent, as does the employment-to-population ratio of 64.0 per cent.

Chart 3: Participation, unemployment and underemployment rates

Source: Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Charts 6.1–6.3; ABS, ‘Labour Force, Australia — April 2024’ (16 May 2024).

However, the position is somewhat more mixed in the industry sectors with the most modern award-reliant employees, with both employment and hours worked having fallen in Accommodation and food services and employment having fallen in Retail trade over the year to December 2023.

Table 10: Filled jobs and hours actually worked in industries with the most modern award-reliant employees, growth over the year to the December quarter 2023

Industry	Annual growth in filled jobs	Annual growth in hours worked
Retail trade	-1.3	0.3
Accommodation and food services	-2.9	-5.8
Administrative and support services	2.5	6.9
Health care and social assistance	9.2	9.2

Source: ABS, ‘Labour Account Australia — December 2023’ (8 March 2024).

Notwithstanding that the labour market overall has performed somewhat more strongly than expected 12 months ago, wages growth has remained broadly within expectations. Table 11 shows that wages growth is at elevated levels compared to most of the last decade, but appears to have reached or perhaps passed its peak. The WPI increased by 0.8 per cent, seasonally adjusted, in the March quarter 2024, lower than for the four preceding quarters.

Table 11: Measures of nominal wages growth, growth rate over the year

Year ended (Quarter)	WPI (% change)	AWOTE^ (% change)	C10 (% change)	AAWI (% change)	AENA^^ (% change)
Dec-13	2.6	2.9	2.6	3.4	3.2
Dec-14	2.5	2.8	3.0	3.4	1.9
Dec-15	2.2	1.6	2.5	3.0	0.6
Dec-16	1.9	2.2	2.4	3.1	0.3
Dec-17	2.1	2.4	3.3	2.5	2.0
Dec-18	2.3	2.3	3.5	2.9	2.3
Dec-19	2.2	3.3	3.0	2.7	3.3
Dec-20	1.3	3.2	1.8*	2.2	3.6
Dec-21	2.4	2.2	2.5	2.6	4.7
Dec-22	3.3	3.4	4.6	3.0	3.8
Dec-23	4.2	4.5	5.7**	4.3	5.0
Mar-24	4.1	n/a	5.7**	n/a	n/a

Note: * Actual increase from the Annual Wage Review 2019–20 was 1.75 per cent. ** Actual increase from the Annual Wage Review 2022–23 was 5.75 per cent. Increase calculated from wage rates rounded to the nearest cent. ^ Average weekly ordinary time earnings data are presented for November of each year. ^^ Average Earnings National Accounts = Compensation of employees / Total number of employees.

Source: Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Table 5.1.

The Commission’s own data concerning the average annual wage increase (AAWI), where ascertainable, provided for in enterprise agreements which are the subject of applications to the Commission for approval tends to confirm that wages growth has passed its peak. Table 12 shows the average AAWI, weighted for the number of employees covered by each agreement, for 2024 (to the fortnight ending 19 April) compared with each half of 2023.

Table 12: Average AAWI for enterprise agreements, 2023–2024

Period	Average AAWI
1 January – 30 June 2023	3.5%
1 July – 31 December 2023	4.0%
1 January – 19 April 2024	3.8%

Currently, the biggest driver of wages growth in the economy is individual arrangements in the private sector. Across industry sectors, with the exception of Health care and social assistance, there was not a significant degree of difference in wages growth compared to the national figure for the year to March 2024. The more highly modern award-reliant Retail trade, Accommodation and food services and Administrative and support services sectors experienced wages growth of 4.4, 4.0 and 4.3 per cent respectively compared to all industries growth of 4.1 per cent, notwithstanding the 5.75 per cent increase awarded in the AWR 2023 decision. The 5.3 per cent increase in the Health care and social assistance sector likely reflects the 15 per cent minimum pay increase for direct care workers in aged care which took effect on 30 June 2023 and was in addition to the 5.75 per cent increase.
The RBA and Budget forecasts for employment growth and unemployment are broadly similar and indicate a softening but, in historical terms, still robust labour market. Consistent with this, they forecast a moderation of wages growth, but to a level which remains relatively high by recent standards and, on their respective forecasts for inflation, would result in modest real wages increases over 2024–25. The Budget’s forecast for the WPI for 2024–25 is somewhat lower than the RBA’s. The Budget forecasts that, as a result of increasing real wages together with the Stage 3 tax cuts, real household disposable income will increase by 3.5 per cent in 2024–25.

Table 13: RBA and Budget forecasts for employment and wages

June 2024	Dec 2024	June 2025	Dec 2025	June 2026
Employment growth % RBA Budget	2.1 2¼	1.4	1.2 ¾	1.3	1.4 1¼
Unemployment rate % RBA Budget	4.0 4	4.2	4.3 4½	4.3	4.3 4½
Wage Price Index % RBA Budget	4.2 4	3.8	3.6 3¼	3.4	3.3 3¼

Source: Commonwealth of Australia, Budget 2024–25: Budget Strategy and Outlook (Budget Paper No. 1, 14 May 2024) 53; Reserve Bank of Australia, Statement on Monetary Policy (May 2024) 51.

3.4 Business conditions and outlook

Total business profits declined by 5.4 per cent in the 12 months to the December quarter 2023, but this was the result of a large decline of 14.5 per cent in mining profits linked to a 15.4 per cent fall in commodity prices over the year.[52] In non-mining sectors, profits grew by 4.2 per cent, higher than for 2022. This result was somewhat lower than the annualised growth rates over the last 5- and 10-year periods, but we note the distortion produced by the unusual level of profits growth in the first year of the COVID-19 pandemic in 2020.

Table 14: Company gross operating profits, mining and non-mining industries, growth rates

Quarter	Mining (%)	Non-mining (%)	Total (%)
Dec-13	37.0	1.3	11.3
Dec-14	-20.5	1.3	-6.2
Dec-15	-16.0	2.4	-3.0
Dec-16	78.3	10.7	27.8
Dec-17	2.5	6.3	5.0
Dec-18	28.6	3.0	11.8
Dec-19	8.5	1.0	3.9
Dec-20	3.7	24.0	15.6
Dec-21	37.4	0.8	14.3
Dec-22	33.0	2.1	15.8
Dec-23	-14.5	4.2	-5.4
5 years to Dec-23*	11.9	6.0	8.5
10 years to Dec-23*	10.7	5.4	7.5

Note: *Annualised growth rates.

Source: ABS, ‘Business Indicators, Australia — December 2023’ (4 March 2024).

The picture for profits was mixed for industry sectors which have a high degree of modern award reliance. Most notably, there was a substantial decline in profits in the Accommodation and food services sector, in which about 22 per cent of modern award-reliant employees are located. Profits in the Retail trade sector and in Arts and recreation services were also flat. This likely reflects reductions in discretionary spending by consumers in the face of higher interest rates. However, profits growth in Administrative and support services, Other services and Rental, hiring and real estate services was healthy, albeit less so in the December quarter 2023.

Chart 4: Growth in gross operating profits, current prices, by industry

Note: * Data for Financial and insurance services encompasses only the Auxiliary finance and insurance services subdivision. **All industries includes only the private sector (excluding Public administration and safety, Education and training and Health care and social assistance) and excludes Agriculture, forestry and fishing.

Source: Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Chart 3.2; ABS, ‘Business Indicators, Australia — December 2023’ (4 March 2024).

For the year to June 2023 (the latest available data), business entry rates exceeded business exit rates, and there was a large increase in the number of businesses in the higher turnover range.[53] The latest available data for the business bankruptcy rate, for 2022–23, shows that the bankruptcy rate has increased slightly but remained well below the rate experienced for most of the past decade.[54] Total retail turnover, seasonally adjusted, increased by 0.8 per cent in the 12 months to March 2024, but there are significant variations in turnover change between different retail sectors, and total turnover declined in the March quarter 2024 largely because of a significant decline in Household goods retailing.[55]

Private business investment growth has been strong over the last 18 months, and grew by 8.2 per cent (5.9 per cent in Mining and 8.9 per cent in Non-mining) during 2023. It is forecast to continue to grow in 2024, albeit at a slower rate.[56]

Business surveys give mixed reports. The NAB Quarterly Business Survey for the March quarter 2024, published on 18 April 2024, shows an increase in business confidence compared to the December quarter 2023 and the March quarter 2023, but remains in negative territory.[57] Business conditions are assessed as having ‘stabilised at above-average levels’, but are lower than for 12 months ago. Business activity overall is assessed as ‘resilient’, with positive outcomes for expected forward orders, capacity utilisation and capital expenditure. In respect of the labour market, expectations for employment have eased but remained positive, and 78 per cent of firms reported availability of labour as a constraint on output. The rate of labour cost growth slowed slightly to 1.2 per cent in the March quarter 2024, but expectations are for this to reduce significantly to 0.9 per cent in the next three months and for expected average wage growth to be 2 per cent for 2023–24. Nonetheless, wage costs remain the top issue affecting business confidence. Purchase cost growth, final product price growth and retail price growth are all expected to reduce over the next three months. The NAB survey projects that ‘price growth measures are now tracking around a rate that, if maintained, would be consistent with inflation easing towards the top of the RBA’s target range’[58] by the end of 2024.

The ACCI–Westpac Survey of Industrial Trends is focused on manufacturing. The survey conducted in the period from 15 February to 11 March 2024[59] indicated a deterioration in conditions in the manufacturing sector in the March quarter 2024 with a decline in new orders, a fall in output, and a reduction in overtime and in staff numbers. However, manufacturers’ expectations are more positive, indicating that ‘the weakness in conditions coming back from summer holidays may be relatively short-lived, or at least somewhat overstated’.[60] Sentiment about the general business situation has deteriorated over the last two years because of increases in costs and interest rates, and ‘continued to move deeper into pessimistic territory’ in the March quarter 2024.[61] Investment intentions remain robust, but capacity utilisation has declined. In respect of the labour market, firms are now reporting that labour is now ‘easier to find’ than in the December quarter 2023, but expect further upward pressure on wages (notwithstanding an easing in actual wages growth in manufacturing to 4.2 per cent in the December quarter 2023).^[62]

3.5 Productivity

Australia’s long run rate of productivity growth over the last 15 years (measured to 2022) has been lower than it was in the 1990s and the early 2000s. However, this has been an international phenomenon and, on average over this 15-year period, productivity growth in Australia has been higher than in most comparable economies.

Table 15: Labour productivity growth in Australia, New Zealand, G7 countries and the OECD,[63] 2022

Annual, 2022 (%)	15-year annualised (%)
Australia	-2.0	1.1
United States	-1.6	1.2
United Kingdom	1.0	0.4
France	-1.9	0.3
Germany	0.5	0.7
Italy	-0.3	0.2
Canada	-0.8	0.8
Japan	0.9	0.8
New Zealand	0.1	0.8
OECD average	-0.7	0.9

Source: Fair Work Commission, Information note—Labour productivity, additional material for the Annual Wage Review 2023–24, 6 May 2024; OECD, ‘Level of GDP per capita and productivity’, OECD.Stat (Web Page, viewed 9 April 2024).

What is unusual, as Table 15 shows, is the disruption to productivity growth caused by the COVID-19 pandemic and its aftermath in Australia. Labour productivity, as measured by GDP per hour worked, increased during the pandemic phase by 2.4 per cent in 2020 and 2.5 per cent in 2021. This above-average rate of growth has been explained on the basis that the industry sectors which were most affected by lockdowns and other restrictions on public movement, such as hospitality and retail, were those which typically had lower levels of labour productivity. When these sectors shed labour to a disproportionate extent during the pandemic phase, average labour productivity across the economy grew as a consequence. This effect reversed itself in the recovery phase, when the same sectors fully reopened and employment and hours worked grew rapidly, supported by the resumption of immigration. In addition to the full resumption of operations in sectors with lower labour productivity levels, productivity performance was further affected by the extent of the use of inexperienced workers to meet demand and the fact that employment growth outpaced growth in capital stock, meaning less capital was deployed per unit of labour.[64]

The result has been that productivity fell by 4.5 per cent to the December quarter 2022 and 0.4 per cent to the December quarter 2023,[65] meaning that there has been no overall growth in productivity since March 2018 (or, in the market sector, June 2020). This is clearly abnormal both in the context of Australia’s post-war economic history and in the international context (as Table 15 makes clear). In the AWR 2023 decision,[66] this poor productivity performance was a moderating factor in the determination of the quantum of minimum wage increases awarded. Combined with relatively high wages growth, the reduction in productivity over 2022 and 2023 has caused a significant increase in nominal unit labour costs.

Chart 5: Unit labour costs, index

Source: Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Chart 2.3; ABS, ‘Australian National Accounts: National Income, Expenditure and Product — December 2023’ (6 March 2024).

There have been some signs that the Australian economy is moving past this post-pandemic phase and may be reverting to its long run rate of productivity growth. Productivity (GDP per hour worked) increased by 1 per cent in the September quarter 2023 and 0.5 per cent in the December quarter 2023. The strong growth in business investment will presumably yield productivity dividends at some stage. The RBA’s forecast is for productivity growth of 1.8 per cent for 2023–24 and 1.3 per cent for 2024–25. However, in its Statement on Monetary Policy for May 2024, the RBA said that ‘substantial uncertainty remains around the [productivity] outlook’, and downgraded its productivity growth forecast for 2023–24.[67] The Budget does not contain an explicit forecast for productivity. It states that productivity ‘is expected to continue to pick up as economic conditions improve’,[68] but later goes on to say:

While productivity has grown for two consecutive quarters, the extent to which productivity growth will recover remains uncertain. A slower recovery in productivity growth could have implications for both inflation and growth.[69]

Relative living standards and the needs of the low paid

Sections 134(1)(a) and 284(1)(c) require consideration of the ‘relative living standards and the needs of the low paid’. ‘Relative living standards’ is plainly a comparative concept. In past annual wage review decisions, ‘the low paid’ have also been defined in a comparative way in that the measure adopted has been those employees whose ordinary-time earnings are below two-thirds of median adult ordinary-time earnings of all full-time employees. There are two measures of this benchmark. The first is derived from the ABS Characteristics of Employment (COE) data. Based on the COE data for August 2023, the benchmark is $1066.67 per week. The second is derived from the ABS EEH data, and as at May 2023 is $1131.33 per week.[70]

On the COE benchmark, every modern award minimum weekly rate of pay up to and including the C8 classification rate[71] is below the low paid threshold. On the EEH benchmark, it is every modern award rate up to and including the C7 rate. However, other award ordinary-time pay entitlements such as industry and other allowances, shift loadings, evening and weekend penalty rates payable on ordinary time, and the casual loading where applicable, also need to be taken into account in assessing employees’ earnings for the purpose of comparison with the low paid benchmark. Thus, while the majority of modern award base pay rates are below the benchmark, only a minority, albeit a substantial minority (36.1 per cent) of modern award-reliant employees (on adult rates of pay) are actually low paid.[72] Using the comparative measure referred to, it is their needs which must be taken into account insofar as modern awards are concerned. This group constitutes approximately 6.2 per cent of the total employee workforce.[73]

In respect of the NMW, because an employee to whom the NMW applies is, by definition, not entitled to any of the additional ordinary-time pay entitlements which may apply to award-reliant employees, any such employee is necessarily low paid using the measure described above. However, for the reasons set out earlier in this decision, we are not satisfied that the number or proportion of employees in this category are other than very small.

Not all low paid workers live in low-income households. Approximately one-third of low paid employees reside in employee households in the top five income deciles, measured by equivalised household disposable income.[74] Their needs, and relative living standards, are therefore not the main focus of our consideration, which is rather upon those low paid workers who reside in low-income households.

For such workers, their immediate need is to maintain their living standards in the face of the significant increase in the cost of living. The effect of relatively high inflation over the past three years has been to reduce the real wages of modern award-reliant employees, notwithstanding that last year’s increase of 5.75 per cent was the largest national wage increase for approximately forty years and that their nominal wage rates have grown more than the WPI over the period.

Chart 6: Real WPI growth by method of setting pay—1, 3 and 5 years

Note: Data are in original terms.

Source: Fair Work Commission; ABS, ‘Wage Price Index, Australia — March 2024’ (15 May 2024); ABS, ‘Consumer Price Index, Australia — March Quarter 2024’ (24 April 2024).

The NMW has not, however, declined in real terms over this period because the AWR 2023 decision[75] discontinued the traditional alignment of the NMW with the C14 rate and instead aligned the NMW with the higher C13 rate. The 5.75 per cent increase was then applied to this realigned rate (currently $882.80 per week or $23.23 per hour). The result of this is that the ratio of the NMW to median earnings is at its highest point (55.2 per cent) for a decade.[76]

For low paid NMW and modern award-reliant workers, the cost-of-living situation they face is likely worse than Chart 6, which deflates wage rates by the headline CPI, indicates. The CPI rate of inflation for non-discretionary goods such as food, automotive fuel, housing and health costs was 4.2 per cent over the 12 months to the March quarter 2024, higher than the headline CPI rate of 3.6 per cent.[77] The LCI for employee households, which takes into account increased mortgage costs, is higher still: over the same period, it was 6.5 per cent.[78] We therefore conclude that low paid NMW- and modern award-reliant employees in low-income households are continuing to experience financial stress and a decline in living standards because of inflation.

The Stage 3 tax cuts which will take effect from 1 July 2024 will provide some relief from cost-of-living pressures for modern award-reliant workers. However, low paid workers will not benefit from these tax cuts to the same degree as those earning around median incomes. For an employee earning wages at the COE-derived low paid benchmark of $1066.67 per week, the tax cut will be worth about $20.50 per week compared to about $33.85 per week for an employee on the COE measure of median earnings.[79] Further, we note that, from a longer-term perspective, the tax cuts will mostly but not fully reverse the effects of bracket creep over the last 12 years for low-income earners.[80]

Low paid workers will obtain some further relief from a number of the measures announced in the Budget to assist with the cost of living. All households will benefit from the energy bill rebate. The 10 per cent increase in the maximum rate of Commonwealth Rent Assistance will be of benefit to some low paid workers who rent their accommodation — generally, low-income households with dependent children who are eligible for Family Tax Benefit Part A at more than the base rate, and low paid workers who receive other types of Commonwealth income support payments. Other Budget measures potentially relevant to low paid workers are:

·A one-year freeze on indexation of the maximum Pharmaceutical Benefits Scheme (PBS) patient co-payment for everyone with a Medicare card.
·A reduction of indexation amounts for debts incurred under the Higher Education Loan Program. However, this is not likely to be of short-term assistance to any low paid workers under this scheme, since no debt repayments are required until annual earnings exceed $54,434 (for 2024–25) and repayments are calculated based on income levels, not the size of the debt.

In the AWR 2023 decision, the Expert Panel referred to the budget standards report published by the Commission in March 2023 which, among other things, analysed disposable incomes when receiving the then-C14 rate, to which the NMW was then aligned, on a full-time basis relative to budgets constructed according to the Minimum Income for Healthy Living (MIHL) standard for 14 household types. This showed that, excluding discretionary spending, 12 of those 14 household types earned less than the budget amounts necessary to meet the MIHL standard and, if discretionary spending was included, none of them did.[81]
However, we do not consider that this analysis can be given significant weight in our consideration of relative living standards and the needs of the low paid for three reasons. First, as already stated, the AWR 2023 decision changed the alignment of the NMW from the C14 rate to C13. Second, because it is not possible to identify anyone to whom the NMW actually applies, we do not know which, if any, of the household types is relevant to NMW-reliant employees. The third is that, as foreshadowed in the AWR 2023 decision,[82] a review of those modern awards containing the C14 rate has now substantially been completed. This Review was widened in scope following the AWR 2023 decision to include any modern awards containing a classification rate below the C13 level and ultimately encompassed 70 modern awards (including a number of modern enterprise awards). In a decision issued on 16 April 2024,[83] the Full Bench conducting the review determined that the lowest adult rate in any modern award applicable to ongoing employment should be at least the C13 rate, and that any rate below the C13 rate (including but not limited to the C14 rate) must be an entry-level rate which operates only for a limited period not exceeding six months and provides a clear transition to the next classification rate (which must not be less than the C13 rate).[84] The Full Bench’s decision outlined, on a provisional basis, the variations to be made to each relevant award with an operative date of 1 January 2025. Although the Full Bench prescribed a maximum period of six months for any employee to remain on a classification rate that is below the C13 rate, in the large majority of proposed award variations the actual period is three months or less. We can reasonably anticipate therefore that, by the time of next year’s annual wage review, any award rate below the C13 rate will simply be a temporary stepping stone to a rate at the C13 level or higher. In these circumstances, we do not consider it useful to continue to analyse relative living standards or the needs of the low paid by reference to the C14 rate.

The AWR 2023 decision also presented an equivalent analysis of disposable incomes at higher classification levels compared to the MIHL budgets formulated for the 14 household types. At the C10 level, this showed that the budget amount was in excess of income for nine household types if discretionary expenditure was excluded, and 13 household types if included.[85] However, the analysis assumes that an employee at the C10 level receives only the minimum rate of pay for ordinary time and does not receive any additional allowances, loadings or penalty rates for ordinary time. Nor does the analysis take into account any overtime earnings. For that reason, it is not possible to say that, for any household type, the analysis presents a realistic picture of disposable income for an employee classified at C10.

We consider that further research is necessary to gain a better understanding as to the modern awards and classification levels which predominantly apply to modern award-reliant employees who are low paid, and the earnings which employees can realistically expect to obtain at various award classification levels inclusive of additional payments such as allowances, loadings and penalty rates. The Commission will explore opportunities for a research project after the completion of this Review. We note that in the AWR 2023 decision[86] the Expert Panel said that there should be a comprehensive review of the NMW by reference to the budget standards research and other relevant material to arrive at a NMW amount which is set having proper regard to the needs of the low paid and the other considerations in s 284(1) of the FW Act. However, as already stated, we have now come to the view that it is not currently possible to identify persons to whom the NMW actually applies, and the number of such persons is likely to be very small. In light of this, unless any evidence to the contrary emerges, we do not consider that such a review would be a practical proposition.

Gender equality

5.1 Gender pay gaps

As explained in the AWR 2023 decision,[87] s 284(1)(aa) of the FW Act identifies ‘addressing gender pay gaps’ as one of the means by which ‘the need to achieve gender equality’ may be achieved. The gender pay gap may be measured in different ways and for different workforce segments (thus making it apt to refer to gender pay gaps). Using the same measures of the gender pay gap used in previous Reviews, Table 16 shows that the gap has reduced to some degree over the last two years.

Table 16: Estimates of the gender pay gap, 2021 and 2023

Measure	2023			2021
Measure	Male earnings ($)	Female earnings ($)	Gender pay gap (%)	Male earnings ($)	Female earnings ($)	Gender pay gap (%)
Weekly
AWOTE (November)	1982.80	1744.80	12.0	1846.50	1591.20	13.8
EEH adult ordinary time cash earnings, non-managerial full-time (May)	1911.80	1725.60	9.7	1809.10	1617.10	10.6
Hourly
EEH adult total cash earnings, non-managerial full-time (May)	50.50	46.20	8.5	47.50	43.30	8.8
EEH adult ordinary time cash earnings, non-managerial full-time (May)	49.70	46.00	7.4	47.10	43.10	8.5

Note: AWOTE refer to full-time adult employees. The gender pay gap is calculated as the difference between female’s and male’s earnings, expressed as a percentage of male’s earnings. * Adult refers to employees paid an adult rate.

Source: ABS, ‘Average Weekly Earnings, Australia — November 2023’ (22 February 2024); ABS, ‘Employee Earnings and Hours, Australia — May 2023’ (24 January 2024); ABS, ‘Average Weekly Earnings, Australia — November 2021’ (24 February 2022); ABS, ‘Employee Earnings and Hours, Australia — May 2021’ (19 January 2022).

We consider that the approach we intend to be taken to resolve the priority gender undervaluation issues identified in section 5 of this decision gives appropriate weight to the considerations in ss 134(1)(ab) and 284(1)(aa) of the FW Act, and no other consideration in ss 134(1) or 284(1) weighs against this approach.

Conclusion

This section sets out the outcome of this Review and other relevant matters.

The NMW order will contain:

(a)A national minimum wage of $915.90 per week or $24.10 per hour;

(b)Two special national minimum wages for award/agreement free employees with a disability: for employees whose productivity is not affected, a minimum wage of $915.90 per week or $24.10 per hour based on a 38-hour week, and for employees whose productivity is affected, an assessment under the Supported Wage System (SWS), subject to a minimum payment fixed under Schedule A to the order;

(c)Wages provisions for award/agreement free junior employees based on the percentages for juniors in the Miscellaneous Award 2020 applied to the national minimum wage;

(d)The apprentice wage provisions and the National Training Wage Schedule in the Miscellaneous Award 2020 for award/agreement free employees to whom training arrangements apply, incorporated by reference; and

(e)A casual loading of 25 per cent for award/agreement free employees.

The NMW order will operate from 1 July 2024, and will take effect in relation to a particular employee from the start of the employee’s first full pay period on or after 1 July 2024.

Modern award minimum wages will be increased by 3.75 per cent. The variation determinations in respect of all modern awards, modern enterprise awards and State reference public sector awards will operate from 1 July 2024 and take effect in relation to a particular employee from the start of the employee’s first full pay period on or after 1 July 2024.

The determinations necessary to give effect to the increase in modern award minimum wage rates will be made available in draft form shortly after this decision. Determinations varying the modern awards will be made as soon as practicable and the modern awards including the varied wage rates will be published as required by the FW Act.

Our determination in this Review is that the wage rates in all remaining transitional instruments and copied State awards are also increased by 3.75 per cent. This determination comes into operation on 1 July 2024 and takes effect in relation to a particular employee from the start of the employee’s first full pay period on or after 1 July 2024. The Commission is not required to publish the rates of the wages in the relevant transitional instruments or copied State awards as so varied, and accordingly we will not do so.

In relation to the gender undervaluation conclusions stated in paragraphs [112]–[123] and [169]–[172] above, the Commission will shortly initiate proceedings on its own initiative pursuant to s 157 of the FW Act concerning the following awards:

·Children’s Services Award 2010;
·Social, Community, Home Care and Disability Services Industry Award 2010;
·Health Professionals and Support Services Award 2020;
·Aboriginal and Torres Strait Islander Health Workers and Practitioners and Aboriginal Community Controlled Health Services Award 2020; and
·Pharmacy Industry Award 2020.

We wish to express our appreciation to the parties who participated in this Review for their contributions and to the staff of the Commission for their assistance.

PRESIDENT

Appearances:

M Cowgill, J Wettinger, I Redmond and J Bullen for the Australian Government.
K Burke, counsel, with T Greenwell, T Clarke and S Peldova-McClelland for the Australian Council of Trade Unions.
L Harrison for the United Workers’ Union.
C Massy, counsel, with M Kavanagh and T Barnes for the Australian Catholic Council for Employment Relations.
P Grist, J Tinsley and J Morrish for the Australian Chamber of Commerce and Industry.
B Ferguson and J Wilson for the Australian Industry Group.

Hearing details:

2024.

Sydney:
22 May.

Appendix: Proposed minimum wage adjustments

Party	Proposal
Australian Government	No quantum specified (ensuring the real wages of low-paid workers do not go backwards)
New South Wales Government	No quantum specified
Queensland Government	No quantum specified
South Australian Government	No quantum specified
Victorian Government	No quantum specified
Western Australian Government	No quantum specified
Australian Council of Trade Unions	5 per cent increase, and at least 9 per cent for selected occupations, particularly in care and degree-qualified work
Australian Industry Group	Should not exceed 2.8 per cent, applicable to all
Australian Chamber of Commerce and Industry	Increase no more than 2.0 per cent, applicable to all
Australian Council of Social Service	No quantum specified
Australian Catholic Council for Employment Relations	4.9 per cent increase and a minimum 4.9 per cent increase to the C13 to C10 rates
Australian Business Industrial and Business NSW	2.5 per cent increase, applicable to all
Australian Retailers Association	3.1 per cent increase, applicable to all
AUSVEG	No quantum specified
Council of Small Business Organisations Australia	Between 2 to 3 per cent, applicable to all
Entrepreneurial & Small Business Women Australia	No quantum specified
Housing Industry Association	No quantum specified
Laundry Association Australia	No increase. If an increase is awarded, 2 per cent applicable to all
Master Grocers Australia Limited	2.7 per cent increase in the General Retail Industry Award 2020 and the Timber Industry Award 2020
National Farmers’ Federation	No quantum specified
National Retail Association	Increase no more than 2.5 per cent, applicable to all
Restaurant & Catering Association	Increase no more than 2 per cent to the NMW
South Australian Wine Industry Association	Increase no greater than 3.5 per cent for the wine industry
Australian Services Union	5 per cent increase, applicable to all
Flight Attendants’ Association of Australia	Supports the ACTU’s approach and calls for an immediate increase of 2 per cent in the Aircraft Cabin Crew Award 2020, to bring it to 100 per cent of the C10 rate (with internal award relativities maintained)
Shop Distributive and Allied Employees’ Association	5 per cent increase, applicable to all
United Workers’ Union	Increase of at least 5 per cent applicable to all and, in addition, an interim increase to minimum rates in awards relating to the ‘care sector’
Retail and Fast Food Workers Union Incorporated	Replace all rates currently lower than a ‘living wage’ (60 per cent of AWOTE) with a minimum base hourly rate of at least $29.82 and a minimum base weekly rate of $1133.28, ‘including in any retail, miscellaneous and fast food Awards’, and junior, trainee, apprentice and supported wage rates.
Professor Meg Smith and Doctor Michael Lyons	No quantum specified

[1] Fair Work Act 2009 (Cth) s 294(1) (‘FW Act’).

[2] Annual Wage Review 2022–23 [2023] FWCFB 3500, 323 IR 332 (‘AWR 2023 decision’).

[3] Ibid [5].

[4] Ibid [9], [178].

[5] Kelvin Yuen and Josh Tomlinson, A profile of employee characteristics across modern awards (Fair Work Commission Research Report No 1/2023, March 2023) Chart 3.2 (‘Yuen and Tomlinson 2023 Report’).

[6] Ibid Chart 3.3: General Retail Industry Award 2020 [MA000004] (11.0%), Social, Community, Home Care and Disability Services Award 2010 [MA000100] (10.5%), Hospitality Industry (General) Award 2020 [MA000009] (9.5%), Fast Food Industry Award 2020 [MA000003] (7.9%), Restaurant Industry Award 2020 [MA000119] (5.4%), Children’s Services Award 2010 [MA000120] (4.8%), Clerks—Private Sector Award 2020 [MA000002] (3.9%), Health Professionals and Support Services Award 2020 [MA000027] (3.8%), Vehicle Repair, Services and Retail Award 2020 [MA000089] (3.5%) and Cleaning Services Award 2020 [MA000022] (3.2%); AWR 2023 decision[2023] FWCFB 3500, 323 IR 332 [50], Chart 1.

[7] AWR 2023 decision[2023] FWCFB 3500, 323 IR 332 [51], Table 2.

[8] Ibid [12]–[45].

[9] Ibid [22].

[10] Ibid [7].

[11] Australian Government submission to the Annual Wage Review 2022–23 (31 March 2023) Chart 4.1.

[12] FW Act ss 329 and 333; Fair Work Regulations 2009 (Cth) reg 2.13.

[13] MA000104.

[14] ABS, ‘Employee Earnings and Hours, Australia methodology — May 2021’ (19 January 2022).

[15] Josh Tomlinson, Characteristics of employees on the National Minimum Wage (Fair Work Commission Research Report No 1/2024, February 2024) (‘NMW Report’).

[16] Ibid 4.

[17] Australian Government submission (28 March 2024) Chart 4.1.

[18] The rate of the NMW is used to set the amount of parental leave pay under the Commonwealth Government’s Paid Parental Leave Scheme: Paid Parental Leave Act 2010 (Cth) ss 4, 65(2). However, that does not make the NMW applicable to employees utilising this scheme, and consideration of this consequential effect of setting the NMW does not arise under ss 134(1) or 284(1) of the FW Act.

[19] Yuen and Tomlinson 2023 Report 13.

[20] [2023] FWCFB 3500, 323 IR 332 [46]–[54].

[21] Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Table 7.6.

[22] Ibid.

[23] MA000004.

[24] MA000100.

[25] MA000009.

[26] MA000003.

[27] MA000119.

[28] MA000120.

[29] MA000002.

[30] MA000027.

[31] MA000089.

[32] MA000022.

[33] AWR 2023 decision[2023] FWCFB 3500, 323 IR 332 [50], Chart 1.

[34] Ibid [51], Table 2.

[35] Yuen and Tomlinson 2023 Report Chart 3.2.

[36] AWR 2023 decision[2023] FWCFB 3500, 323 IR 332 [56].

[37] Australian Government submission (28 March 2024) Chart 4.1.

[38] [2024] FWCFB 250.

[39] [2023] FWCFB 3500, 323 IR 332 [49], Table 1.

[40] Annual Wage Review 2021–22 [2022] FWCFB 3500, 315 IR 367.

[41] AWR 2023 decision[2023] FWCFB 3500, 323 IR 332 [77]–[78].

[42] ABS, ‘Wage Price Index, Australia methodology — March 2024’ (15 May 2024).

[43] ABS, ‘Wage Price Index, Australia — March 2024’ (15 May 2024).

[44] Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Table 4.2.

[45] ABS, ‘Consumer Price Index, Australia — March Quarter 2024’, (24 April 2024).

[46] Reserve Bank of Australia, Statement on Monetary Policy (May 2024) 4.

[47] Ibid 1–2.

[48] The Treasury Laws Amendment (Cost of Living—Medicare Levy) Act 2024 also increased the Medicare levy low-income thresholds.

[49] Commonwealth of Australia, Budget 2024–25: Budget Strategy and Outlook (Budget Paper No. 1, 14 May 2024) 51.

[50] Ibid.

[51] Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Table 14.2.

[52] In SDR (special drawing right) terms: ‘Index of Commodity Prices – April 2024’, Reserve Bank of Australia (Web Page, 1 May 2024).

[53] Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Chart 3.5; ABS, ‘Counts of Australian Businesses, Including Entries and Exits — July 2019 to June 2023’ (22 August 2023).

[54] Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Chart 3.4.

[55] Ibid Charts 3.6 and 3.7; ABS, ‘Retail Trade, Australia — March 2024’ (28 May 2024).

[56] ABS, ‘Australian National Accounts: National Income, Expenditure and Product — December 2023’(6 March 2024); Statement on Monetary Policy, Reserve Bank of Australia (May 2024) 26; Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Tables 14.3, 14.4.

[57] National Australia Bank, NAB Quarterly Business Survey Q1 2024 (18 April 2024) 1.

[58] Ibid.

[59] Australian Chamber of Commerce and Industry and Westpac Banking Corporation, ACCI–Westpac Survey of Industrial Trends (Report No 250, March 2024) 1.

[60] Ibid 3.

[61] Ibid.

[62] Ibid 7.

[63] Organisation for Economic Co-operation and Development.

[64] Reserve Bank of Australia, Statement on Monetary Policy (May 2024) 40; Luci Ellis, ‘The Laptop Warrior, the Barista and the Governor’, Westpac IQ (Web Page, 27 March 2024); Productivity Commission, Quarterly productivity bulletin – December 2023 (December 2023) 3.

[65] Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Table 2.1.

[66] [2023] FWCFB 3500, 323 IR 332 [176(4)].

[67] Reserve Bank of Australia, Statement on Monetary Policy (May 2024) 44–45.

[68] Commonwealth of Australia, Budget 2024–25: Budget Strategy and Outlook (Budget Paper No. 1, 14 May 2024) 40.

[69] Ibid 61.

[70] Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Table 8.2.

[71] See Manufacturing and Associated Industries and Occupations Award 2020 [MA000010] cl 20.1(a).

[72] Statistical Report — Annual Wage Review 2022–23 (Fair Work Commission, 18 May 2023) Table 7.4.

[73] ABS, ‘Microdata: Employee Earnings and Hours, Australia — May 2021’ (10 June 2022).

[74] Australian Government submission to the Annual Wage Review 2021–22 (1 April 2022) [42], Chart 2.2.

[75] [2023] FWCFB 3500, 323 IR 332 [8], [172]–[173].

[76] Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Table 8.1.

[77] Ibid Table 4.1, Chart 4.5.

[78] Ibid Table 4.1.

[79] Australian Government, ‘Estimate Your Tax Cut’, Tax Cuts for Every Taxpayer (Web Page); Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Tables 8.1–8.2; ABS, ‘Characteristics of Employment Australia — August 2023’ (13 December 2023).

[80] Paul Tilley, ‘Stage 3 Tax Cuts v Bracket Creep: Time to Index the Personal Income Tax Rate Scale’ (Policy Brief No 4/2024, Tax and Transfer Policy Institute, Crawford School of Public Policy, Australian National University, March 2024) Figure 5.

[81] AWR 2023 decision[2023] FWCFB 3500, 323 IR 332 [101].

[82] Ibid [103], [173].

[83] Review of C14 and C13 rates in modern awards [2024] FWCFB 213.

[84] Ibid [7], [30].

[85] AWR 2023 decision[2023] FWCFB 3500, 323 IR 332 [109], Table 15.

[86] Ibid [108].

[87] Ibid [45].

[88] Ibid [118]–[119].

[89] Ibid [2023] FWCFB 3500, 323 IR 332 [119]; Statistical Report — Annual Wage Review 2022–23 (Fair Work Commission, 18 May 2023) Table 11.2.

[90] Equal Remuneration Decision 2015 [2015] FWCFB 8200, 256 IR 362 [292]; AWR 2023 decision[2023] FWCFB 3500, 323 IR 332 [37]–[38]; Aged Care Award 2010; Nurses Award 2020; Social, Community, Home Care and Disability Services Industry Award 2010 [2024] FWCFB 150 [16] (‘Stage 3 Aged Care decision’).

[91] FW Act s 284(1)(aa).

[92] AWR 2023 decision[2023] FWCFB 3500, 323 IR 332 [40].

[93] Ibid [124].

[94] [1991] AIRC 281, 36 IR 120, Print J7400.

[95] [1989] AIRC 525, 30 IR 81, Print H9100.

[96] AWR 2023 decision[2023] FWCFB 3500, 323 IR 332 [133].

[97] Metal Industry Award 1984 [AW819234], Print F8925, later the Metal, Engineering and Associated Industries Award, 1998 – Part I [AW789529], Print Q2527.

[98] AWR 2023 decision [2023] FWCFB 3500, 323 IR 332 [134].

[99] Ibid [137].

[100] Ibid [137]–[138].

[101] Ibid.

[102] Natasha Cortis et al, UNSW Social Policy Research Centre, Gender-based Occupational Segregation: A National Data Profile (Final Report, 6 November 2023) (‘Stage 1 report’).

[103] Derived from Table 5.2 of the Stage 1 report.

[104] In addition, the Educational Services (Schools) General Staff Award 2020 [MA000076] covers school uniform shops.

[105] See footnote above.

[106] All references to Hospitals in this table exclude psychiatric hospitals.

[107] ‘Child Carers’ encompasses employees within the Levels 2, 3 and 4 classifications in the Children’s Services Award 2010.

[108] Stage 1 report 13.

[109] By reference to Damian Grimshaw and Jill Rubery, ‘Undervaluing Women’s Work’ (Working Paper No 53, European Work and Employment Research Centre, University of Manchester, 2007).

[110] Derived from Tables 7.2, 8.2, 9.2, 10.2, 12.2 and 13.2 of the Stage 1 report.

[111] Fair Work Commission, Stage 2 report — Gender pay equity research — Annual Wage Review 2023–24 (Report, 4 April 2024) (‘Stage 2 report’).

[112] MA000018.

[113] MA000034.

[114] [2024] FWCFB 150.

[115] Ibid.

[116] [1972] CthArbRp 1420, 147 CAR 172.

[117] Stage 3 Aged Care decision[2024] FWCFB 150 [62]–[75].

[118] Ibid [92].

[119] Ibid [94].

[120] Ibid [96]–[110], [134].

[121] Ibid [156(1)]. PCW, HCW and AIN stand for personal care worker, home care worker and assistant in nursing respectively.

[122] Ibid [111]–[135], [156(2)].

[123] Ibid [207(2)].

[124] Equal Remuneration Case — Australian Municipal, Administrative, Clerical and Services Union and others PR525485; see also Equal Remuneration Case [2012] FWAFB 1000, 208 IR 446 and Equal Remuneration Case [2012] FWAFB 5184, 223 IR 410.

[125] Stage 3 Aged Care decision[2024] FWCFB 150 [158]–[172].

[126] Ibid [173].

[127] Application by Independent Education Union of Australia [2021] FWCFB 2051 (‘Teachers decision’).

[128] Stage 3 Aged Care decision[2024] FWCFB 150 [204].

[129] MA000077.

[130] Application by United Workers’ Union, Australian Education Union and Independent Education Union of Australia [2023] FWCFB 176.

[131] Ibid.

[132] Commonwealth of Australia, Budget 2024–25: Budget Strategy and Outlook (Budget Paper No. 1, 14 May 2024) 31.

[133] Ibid.

[134] Matter AM2024/11.

[135] MA000010.

[136] Aged Care Award 2010; Nurses Award 2020; Social, Community, Home Care and Disability Services Industry Award 2010 [2022] FWCFB 200, 319 IR 127 (‘Stage 1 Aged Care decision’).

[137] Application by Australian Liquor, Hospitality and Miscellaneous Workers Union [2005] AIRC 28, PR954938 (‘ACT Child Care decision’).

[138] Ibid [142]–[155].

[139] [1989] AIRC 525, 30 IR 81, Print H9100.

[140] [1998] AIRC 1413, 123 IR 240, Print Q7661.

[141] See, eg, Stage 1 Aged Care decision[2022] FWCFB 200, 319 IR 127 [759]–[857], [893]–[896]; Stage 3 Aged Care decision[2024] FWCFB 150 [156].

[142] [2005] AIRC 28, PR954938 [211].

[143] [2024] FWCFB 150 [199]–[201].

[144] MA000115.

[145] MA000012.

[146] Stage 1 report Table A.5: 64.3 per cent.

[147] [2023] FWCFB 3500, 323 IR 332 [134].

[148] AM2022/34 Recommendation, 9 June 2023.

[149] MA000118.

[150] MA000076.

[151] MA000005.

[152] MA000047.

[153] Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Chart 6.8.

[154] Ibid Chart 6.3.

[155] Ibid Chart 6.2.

[156] [2023] FWCFB 3500, 323 IR 332 [141].

[157] Ibid [142].

[158] Statistical Report — Annual Wage Review 2023–24 (Fair Work Commission, 16 May 2024) Chart 12.1.

[159] Ibid Table 7.5.

[160] AWR 2023 decision[2023] FWCFB 3500, 323 IR 332 [148].

[161] Ibid [149]–[151].

[162] Annual Wage Review 2018–19 [2019] FWCFB 3500, 289 IR 316 [372].

[163] Annual Wage Review 2020–21 [2021] FWCFB 3500, 307 IR 203 [160].

[164] [2023] FWCFB 3500, 323 IR 332 [152]–[154].

[165] Australian Chamber of Commerce and Industry submission (28 March 2024) 2.

[166] [2023] FWCFB 3500, 323 IR 332 [155].

[167] International Monetary Fund, World Economic Outlook: Steady but Slow: Resilience amid Divergence (Report, April 2024) 54–5, Figure 2.12.

[168] Transcript, 22 May 2024 PN 322.

[169] Australian Council of Trade Unions submission (28 March 2024) [4].

[170] AWR 2023 decision [2023] FWCFB 3500, 323 IR 332 [87].

[171] Ibid [179].

[172] Ibid.

[173] MA000116.

[174] Australian and New Zealand Standard Classification of Occupations.

[175] Australian and New Zealand Standard Industrial Classification.

[176] Transcript, 22 May 2024 PNs 346, 353.

[177] Australian Business Industrial and Business NSW submission (29 April 2024) [2.65].

[178] [2023] FWCFB 3500, 323 IR 332 [139].

[179] Annual Wage Review 2016–17 Preliminary Decision [2017] FWCFB 1931 [45]–[60].

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