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Annual Wage Review 2023-24

Annual Wage Review 2023-24

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[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

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] FWCFB 3500
Decision Date: 3 JUNE 2024

CaseChat Overview and Summary

The Fair Work Commission, comprising full-time and part-time members, was tasked with conducting the Annual Wage Review 2023–24 under section 285 of the Fair Work Act 2009. This review involved assessing the national minimum wage and modern award minimum wages to determine if any adjustments were warranted. The Commission's decision affects a significant proportion of the workforce, particularly those employees who are covered by modern awards, which account for approximately 20.7% of all employees. These employees predominantly work part-time hours, are female, and are often employed by small businesses. The Review's outcomes directly impact their wages and, by extension, the broader economic context of wage adjustments in Australia.

The central legal issues before the Commission involved determining the appropriate adjustments to the national minimum wage and modern award minimum wages. The Commission had to balance various economic factors, including the current rate of inflation, the Reserve Bank of Australia's monetary policy response, and its potential effects on economic growth and labour markets. Additionally, the Commission considered the uncertain outlook for productivity growth and its implications for wage adjustments. These considerations were essential in making informed decisions that aligned with the Fair Work Act's objectives of ensuring fair and sustainable wages.

The Commission's reasoning and outcome were grounded in a thorough analysis of economic indicators and their implications for wage adjustments. Inflation, although easing, remained a significant challenge, with the headline Consumer Price Index (CPI) at 3.6% for the year to the March quarter 2024. The Commission noted that underlying inflation, as measured by the trimmed mean, stood at 4.0%, and the Employee Living Cost Index (LCI) had increased by 6.5%, reflecting higher living costs. The Reserve Bank of Australia's monetary policy tightening, aimed at curbing inflation, was also considered. The Commission concluded that while inflation had decreased, it remained above the target range, necessitating careful consideration in setting wage adjustments. Ultimately, the Commission decided to award an increase to modern award minimum wages, reflecting the economic context and the need to support low-paid workers.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Overview of the decision 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]

Ratio Decidendi

Legal Principle Established

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. 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. 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.