Heightened economic uncertainty requires a new approach in this year’s Annual Wage Review

“The Australian Industry Group has today filed its submission in the Annual Wage Review. The submission argues that the heightened economic uncertainty requires that a different approach is taken this year in setting minimum wages. There is simply not enough economic data at this stage for an accurate assessment to be made. Given these volatile times, we should wait until after the 3 June National Accounts before finalising the Annual Wage Review,” Innes Willox, the Chief Executive of the national employer association Ai Group, said today.

“The Australian community is facing a rapidly escalating health threat from the Coronavirus ‘COVID-19’ pandemic. The Australian economy and a large number of businesses have been disrupted by measures implemented to respond to COVID-19 internationally and deeper disruptions now seem inevitable. The effects of COVID-19 have come at a time the economy is already slowing and are on top of the damage and disruption of the summer bushfire crisis and severe drought.

“The effects of the COVID-19 pandemic will affect every segment of the economy in 2020. Economic developments as of mid-March indicate a rapid, serious deterioration is now under way.

“The serious economic impacts of the COVID-19 pandemic and the bushfire crisis are not accounted for in the 2019 Fourth Quarter National Accounts figures that were released by the ABS on 4 March 2020. However, these effects will undoubtedly have a big impact on the 2020 First Quarter National Accounts figures that will be released by the ABS on 3 June 2020. In these exceptional circumstances, there is obvious merit in the Commission delaying its decision until the National Accounts figures have been released on 3 June and properly considered. Without taking into account these figures the Commission would be taking unnecessary, very significant risks if a wage increase is awarded.

“The Fair Work Commission usually hands down its Annual Wage Review Decision in early June but this is not in anyone’s interests this year.

“Ai Group’s submission proposes the following sensible approach:

  • The timetable for the Annual Wage Review should be amended to allow industry groups, unions and Governments to file a further written submission by Monday 8 June following the release of the 2020 First Quarter National Accounts statistics on 3 June 2020.
  • “Exceptional circumstances” for the purposes of ss.286(2) and 287(4) of the Fair Work Act justify an operative date of 15 July 2020 this year (i.e. a delayed operative date of two weeks).

“A 15 July 2020 operative date will enable the Commission to hand down its the Annual Wage Review decision in mid-June and to make the National Minimum Wage Order and issue the determinations varying the wages and allowances in each modern award by the end of June. This operative date will also allow sufficient time for employers and employees to be notified of the new wage rates and allowances before they come into operation.

“At this stage, Ai Group has not proposed a particular minimum wage increase given the current exceptional economic uncertainty. We intend to put forward a position to the Commission on the quantum of any minimum wage increase later in the Annual Wage Review proceedings when the state of the Australian economy is clearer,” said Mr Willox.

Ai Group’s submission to the Annual Wage Review is available here

/Public Release. The material in this public release comes from the originating organization and may be of a point-in-time nature, edited for clarity, style and length. View in full here.