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Queensland Economic Advocacy Solutions

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A hint on the FWC’s increase to the National Minimum Wage for 2019-20

Each year the Fair Work Commission (FWC) is responsible for reviewing and setting minimum wages for employees as part of an annual wage review.  The Commission issues a decision for the national minimum wage (NMW) and for pay rates for all 122 modern awards, which comes into operation on 1 July for the following financial year.

The 2018-19 Annual Wage Review is now underway for wage rates in the 2019-20 financial year.  As part of the Review the FWC considers:

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

As part of this process the Commission invites relevant parties (Unions, employer groups, State and Federal Governments and Oppositions) to put forward their own recommended increase and position.   

An analysis of these recommendations again reveals wide variation in proposed increases.  These I believe define the playing field but given the average increase over the past nine years has been $19.50 or 3.2 per cent many of the recommendations for 2019-20 are no more than extremity values or ambit claims that I have previously been critical of.  I continue to believe it is in all employee and employer interests for unions and employer groups to work together to try and work out a consensus position.  This potentially achieves balance between the competing outcomes of profitability, more employment hours and higher wages leading to an overall lift in the standard of living. See my blog on this issue here.

In trying to predict the FWC's decision for 2019-20, the Reserve Bank of Australia believes economic growth will increase despite a revision downwards as part of their latest Statement on Monetary Policy (see below). On the basis of these forecasts it is reasonable to expect that the FWC will again land at a decision in between 3.25 – 3.5 per cent and I believe it will be in that band’s upper range. Accordingly, I am anticipating an increase in the NMW in the order of $25.17 (For what it is worth last year I predicted a $21.50 increase against the FWC decision of $24.30).

Any increase will apply from the first full pay period starting on or after 1 July 2019, for employees on the national minimum wage or a modern award.

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