AIRC has last wage hurrah

THE Australian Industrial Relations Commission recently handed down its last Safety Net Review decision, which left unions offering hearty support, employer groups grumbling and the Federal Government glad to see the last of such decisions.

Capping a series of record high increases in recent years, the AIRC increased federal award minimum wages by $17 per week, or 3.6 per cent at the minimum wage level.

This raises the federal minimum wage for full time adults to $484.40 a week. For casual workers on a minimum wage that have a 25 per cent loading, this amounts to $15.90 an hour.

“The current minimum wage process, through an independent tribunal that balances economic factors along with the needs of low paid workings has once again delivered a decent pay increase for low paid workers of $17 a week,” said ACTU secretary Greg Combet.

However, he expressed concern over comments by Prime Minister John Howard that this will be the last national wage case of this type.

“The Howard Government has announced changes to the way minimum wages are set so that there will be lower outcomes for up to 1.6 million award workers reliant on the minimum wages system,” he said.

Minister for Employment and Workplace Relations, Kevin Andrews, said the AIRC’s decision will provide the foundation for building a new system for the setting of the federal minimum wage.

“In the future, the Australian Fair Pay Commission will ensure that minimum and award classification wages will form the starting point from which future adjustments are made,” he said.

The federal minimum wage will increase rates in the Federal Metals Award classifications to $484.40 and up to as high as $1,031.10, and Minister Andrews said he was committed to maintaining these award classification rates.

The Australian Industry Group said the AIRC’s decision attempts to strike a better balance between adjustments to the minimum wage and changes to income support and taxation arrangements over the past year.

At the same time, the increase is generous given the weak productivity trends over the past 12 months and the weight of evidence pointing to a softening in economic activity ahead, according to Heather Ridout, chief executive of the Australian Industry Group.

“The decision errs on the high side and will ensure that Australia retains the distinction of having one of the highest minimum wages in the world,”she said.

“However, the reality remains that employers will foot the bill, those on the minimum wage will be shortchanged and the Federal Government will be a big winner.”

She said the increase will cost employers $22 after on-costs such as payroll tax, the superannuation guarantee charge and workers compensation premiums are taken into account.

At the same time, Ridout said employees will receive considerably less than the $17 per week increase in pre-tax wages once tax and income support means tests are taken into account.

A single parent family reliant on the minimum wage, for example, will receive an increase of around $4.55 in take-home pay as a result of the $17 a week pay rise, she said, while the Federal Government will pocket around $12.45 (although this will fall slightly once the 2005-06 income tax cuts take effect).

The Australian Chamber of Commerce and Industry (ACCI) said the AIRC decision was at odds with Australia’s slowing economy and the ongoing challenges of unemployment and underemployment.

“The economic and labour market material before the Commission did not justify the level of increase awarded,” said Peter Hendy, chief executive of the ACCI.

“With inflation running at 2.4 per cent, the 2005 wage increase exceeds what is required to protect the low paid.”

Hendy said the AIRC has handed out wage increases 15.5 per cent in excess of inflation since 1997: 5.9 per cent in excess of inflation in the past 4 years alone.

The $17 increase will add more than $1.4 billion to the total annual wages bill of Australian employers, he said –the majority of which will be borne by small and medium businesses.