Transcript of Australian Fair Pay Commission Chairman Professor Ian Harper announcing Federal Minimum Wage Decision at press conference on 26 October, 2006
Good morning ladies and gentlemen and welcome to today’s announcement of the Australian Fair Pay Commission’s inaugural decision on Australia’s federal minimum wage rates.
The Australian Fair Pay Commission was established by the Federal Parliament on 15 December 2005, and received its wage setting powers on 27 March this year — the same day that the appointment of my four fellow Commissioners was announced.
We are pleased to be announcing our first decision today.
The Commission’s first decision has several important elements.
The Commission grants an increase of $27.36 per week in the standard Federal Minimum Wage and in all Pay Scales up to $700 per week. This covers just over one million Australian workers — about 10% of the workforce — who are Pay-Scale reliant; that is, they rely on the Commission’s decisions for adjustments in their wages.
The Commission also awards an increase of $22.04 per week to all Pay Scales paying $700 per week and above, or more than $36,000 per year, representing another 220,000 workers or about 2% of the workforce.
Both increases flow on to junior employees, employees to whom training arrangements apply and employees with a disability.
The higher increase for Pay-Scale reliant workers earning up to $700 per week reflects findings in the Commission’s research and advice contained in submissions that lower-paid workers are more reliant on minimum wages.
The research also shows that higher paid workers are generally more likely to negotiate wage increases directly with their employers by agreement making.
The Commission has also made changes to allow more workers with a disability to access the Supported Wage System and to fill gaps in the coverage of minimum wages for workers with a disability.
All parts of this decision take effect from 1 December 2006. This allows time for employers to implement the wage increases.
And, in announcing today’s decision, I can also confirm that the Commission will deliver its second general wage-setting decision in mid 2007.
Today’s decision takes into account the period of almost 18 months since the last adjustment to Australia’s federal minimum wages.
It acknowledges the sensitivity of low-paid employment to changes in wage levels as well as the incentives for individuals to seek and remain in employment.
It also takes into account
- the fact that the economy and labour market have continued to perform strongly;
- movements in consumer prices; as well as
- the potential impact on unemployment and inflation.
Lastly, and importantly, this decision takes into account the requirement to provide a safety net for the low paid.
The Commission was given a very clear and specific remit in the form of wage-setting powers. These powers are:
- adjusting the standard Federal Minimum Wage (FMW)
- determining or adjusting special FMWs
- determining or adjusting basic periodic rates of pay in the Australian Pay and Classification Scales;
- determining or adjusting basic piece rates of pay; and
- determining or adjusting casual loadings.
The Commission has an objective specified in its legislation to promote the economic prosperity of the people of Australia.
In setting minimum wages, we are also required to have regard to:
a) the capacity for the unemployed and low paid to obtain and remain in employment;
b) employment and competitiveness across the economy;
c) providing a safety net for the low paid; and
d) providing minimum wages for junior employees, employees to whom training arrangements apply and employees with a disability that ensure those employees are competitive in the labour market.
The decision represents a balanced judgement with a clear focus on Australia’s lowest paid workers and the unemployed.
The Commission made its decision informed by more than 115 stakeholder and public consultation meetings, more than 180 submissions from organisations and individuals, and detailed research conducted both by the Australian Fair Pay Commission Secretariat and by expert, external organisations and academic institutions.
The decision was reached after analysis and consideration of the best available evidence gathered through research, submissions and consultation.
On behalf of my fellow Commissioners, I thank all individuals and organisations who contributed to this historic decision-making process, and look forward to continuing this important task as we commence work for our next wage-setting decision in mid-2007.