Queensland Economic Advocacy Solutions

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Unrealistic ambit claims characterise 2017-18 Annual Wage Review

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 2017-18 Annual Wage Review is now underway for wage rates in the 2018-19 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.   Submissions closed yesterday and disappointingly this process is often rife with ambit claims (referred to as a Blue Sky Demand) and unfortunately the 2017-18 Annual Wage Review is no different.

The queen amongst these is obviously the $50 increase proposed by the ACTU (more than double last year’s increase) but also some employer groups recommending no increase at all.

Most of the employer submissions are proposing in their own words ‘modest’ increases between 1.8 and 1.9 per cent.  This contrasts with Reserve Bank of Australia and Federal Budget forecasts of 2.25 per cent for inflation and 2.75 per cent in the wage price index for 2018-19.

For several years during the 1990's I was involved in negotiating consensus positions between a State peak industry body and the State trade labour council that was effectively rubber stamped by the State Industrial Commission.  I often think back to those days and perhaps foolishly wish that we could return to them as I believe it is in all employee and employer interests for unions and employer groups to work together to try and nut 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. 

Instead we have the same old ambit claims from both sides when we know on the balance of the past the FWC will land with a recommendation somewhere in the range of $15.80 and $26.00. Yet employer groups come with a low-ball offer and Unions with a high ball one. Analysis of the past 8 years reveals the average increase was $18.90 and percentage increase of 3.1 per cent.

Based on the current performance of the National Economy it is reasonable to expect that the FWC will land at a ruling in the upper range and I would anticipate it will be between 3 and 4 per cent or $21 and $28 dollars.

Any recommendation by unions or employer groups outside that band is realistically not even in the ballpark and it is perhaps time for them to rethink their adversarial approach to this process.

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