"Today's Fair Work Commission decision will have a profound impact on employers covered by the awards subject of the proceedings, many of which will struggle to meet the scale of increased costs proposed," said Innes Willox, the chief executive of the national employer association The Australian Industry Group.
"The decision contains provisional views proposing substantial variations to certain awards to address what it has found to be gender-based undervaluation in the minimum rates of pay in the relevant instruments being considered through the proceedings.
"If the provisional views are maintained, there will be a dramatic increase in costs for affected employers, many of which are small not for profit organisations in mostly government funded sectors that lack any capacity to meet additional costs.
"The Full Bench has sensibly proposed a process enabling parties to address their provisional views. The Australian Industry Group will now work with industry to determine the potential impact of those views and relevant matters that the Full Bench will need to grapple with. At the very least, there will be a need to carefully work through appropriate transitional arrangements. Employers cannot fairly be saddled with unsustainable cost increases at short notice.
"It is pleasing that the Commission has recognised that the employers in the early education and care sector are largely reliant on Federal Government support and that an absence of increased funding will result in potentially unaffordable increases in childcare costs for some parents. In some circumstances, it will no doubt also result in the reduced availability of childcare services. This is an intolerable situation. Employers, workers and parents will be eagerly awaiting the response of both sides of politics to this issue.
"The variations to the SCHADS Award will result in an increase of over 20% for some workers. It would be deeply misguided to assume that these kinds of increases can simply be accommodated by industry without further increases to government funding, including NDIS funding. Employers in this sector are already struggling to operate under funding arrangements that fail to properly account for their operating costs. The financial strain currently faced by many organisations in this sector is a notorious problem. Many are frankly already facing the prospect of not being commercially viable. This decision will only add fuel to the fire.
"Despite a key catalyst for the case being the 'secure jobs better pay' legislative amendments introduced by the Labor Government, it refused to commit during the proceedings to funding any wage increases, even though the plight of employers unable to afford additional costs was forcefully raised by industry representatives such as the Australian Industry Group.
"The draft report of the independent review of the Government's legislative changes recommended the Government provide advice on its willingness to fund the outcome of the proceedings. This should occur urgently.
"Many employers risk being unfairly left between a rock and an impossibly hard place by the decision. It is crucial that they aren't left picking up the bill for the Government's legislation without appropriate support.
"Of course, the decision will also have impacts beyond the funded sectors. This includes elements of the private healthcare sector.
"It must also be remembered that the case is only dealing with the floor of minimum rates of pay set by awards. Labor's changes to workplace bargaining laws, particularly the controversial changes to expand multi-enterprise bargaining, were specifically designed to make it easier for unions to further increase wages in the funded care economy.
"The ultimate outcome of the proceedings will potentially only represent the tip of the iceberg that will be the cost of Labor's changes to workplace laws. The impacts of changes to IR laws always take time to be fully realised and revealed – it was always going to be a slow burn.
"There are very serious questions that need to be answered about what impact the legislative changes will have on the budget and on childcare and health care costs. Industry will be anxiously awaiting the response of the major sides of politics to the decision and what concrete commitments will be made to assist employers in grappling with its implications.
"Whilst many employers affected by the decision would like to see wage increases for their workers and will welcome the Commission's desire to simplify the manner in which employees are to be classified, their capacity to pass on such significant increases is fundamentally limited by their reliance on Government funding. The implementation of unsustainable increases risks employees losing work and reductions in services to vulnerable people and communities.
"It is notable that the Commission's decision is only dealing with 'priority' awards. There is the predictable potential for rates in other awards, including those applicable in major sectors of the economy to be increased over time because of the legislative changes.
"No doubt the union movement has an ambitious plan for the new laws to deliver wage increases to parts of the economy well beyond those dealt with in this decision.
"What we sorely need is a plan for how the wage increases that have potentially been baked into the system by changes to IR laws will be funded, despite no clear pathway to improving productivity in what is an increasingly uncertain and fragile economic environment," Mr Willox said.
