Landmark decision means employers must implement pay increase for 150,000 workers

by 02 Feb 2012

Fair Work Australia (FWA) announced yesterday that private-sector employers in the social and community services (SACS) industry will be hit with a wage increase requirement ranging from 19% to 41% to be phased in over the next eight years via the industry modern award.

The decision follows a $2bn cash injection by the federal government to facilitate the wage increases for its 40% share of the industry. Prime Minister Julia Gillard said at the time that community-sector workers in the predominately female industry were underpaid and should be more appropriately remunerated  for their work.

In a preliminary decision in May 2011, FWA concluded that male and female employees in the SACS industry did not receive equal remuneration for work of equal or comparable value by comparison with workers in state and local government employment. “We consider gender has been important in creating the gap between pay in the SACS industry and pay in comparable state and local government employment,” it said.

While the majority of the FWA bench supported the wage increase, FWA vice president Graeme Watson disagreed with his colleagues, and said the wage claim was unprecedented on an international level, and did not stand up to scrutiny. Watson said the claim brought forth by the Australian [Municipal, Administrative and Clerical] Services Union (ASU) sought equal pay for men and women across the entire SACS industry to a level approaching public-sector wage levels. “It has more in common with a case based on comparative wage justice than equal pay,” he said.

Additionally, Watson said in his view the applicants failed to establish a factual basis for the key ingredients of their claim, namely that:

  • the public sector is an appropriate equal remuneration comparator
  • the wage gap between the not-for-profit SACS industry and the public sector is primarily due to gender-based undervaluation, and
  • it is appropriate to effectively extract the entire SACS industry from the enterprise-bargaining framework of the Act for the foreseeable future.

Many employer groups and organisations made submissions to FWA rebutting the claim made by the SACS industry union, and raised concerns over funding the wage increases without increased government funding – Ai Group, the Australian Federation of Employers and Industries (AFEI), the Australian Chamber of Commerce and Industry (ACCI) and the Australian Federation of Employers and Industries (AFEI) were among those who made group submissions.

The National Delivery Services submitted that not-for-profit service providers had no capacity to pay for wage increases without increased government funding, and ultimately increases that were not fully funded would result in service reductions.

Catholic Social Services Australia submitted that inadequate funding would impact adversely on jobs, the people seeking services and the community more generally. It submitted that at the time of the hearings, in December 2011, 75% of its services remained unfunded to meet the proposed wage increase.

The increases at each wage level and the further 4% loading will be introduced in nine instalments annually from 1 December 2012 to 1 December 2020.


  • by allan bailey 2/02/2012 5:14:00 PM

    very good decision, and long overdue
    if extra funding is required sobeit
    the people who need these services deserve the best, and so do their carers and support workers
    well done FWA !
    semi-retired HR Manager / Consultant

  • by Mark 2/02/2012 6:07:53 PM

    As an employer in the community sector I find this an extraordinarily negative article which focuses on the one dissenting Commissioner rather than the majority decision of the other five. It also ignores the overwhelming support for the case from sector employers and peak bodies and instead focuses on opposition from external bodies such as AIG. This sector (and therefore our society's most vulnerable members) is facing a staffing crisis which all parties acknowledge is caused by low wages resulting from historical gender inequality. VP Watson is correct in that the applicants didn't properly quantify this - but I'd argue that's a virtually impossible task. There will be some potentially adverse consequences from this decision, particularly if the State Govt reneges on it's obligation to adequately fund the community services that support all Australians. That's a moral decision for Govt though and not in itself a valid reason for denying pay equity.

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