The Role of Saftey Net Awards


Current Issues

National Wage and Safety Net Claims and Outcomes 1991-2005

E-Brief: Online Only issued 2 May 2002 - updated 21 June 2005

Steve O'Neill Analysis and Policy

Economics, Commerce and Industrial Relations Section

Introduction

The term, 'awards acting as a safety net', is used in the Workplace Relations Act 1996 (WR Act) under sec.88A, and reference is made to the 'award safety net' in the Objects of the WR Act.  But the award safety net has a colloquial meaning as well. It refers to the level of wages and conditions which an employee will expect to have access to in the absence of another ‘superior’ instrument, e.g. a collective or certified agreement or individual contract. The award safety net thus includes federal and State awards.

This brief considers federal awards and the (defacto) annual review of award wages called the Safety Net Review (SNR).  It also reviews the transition to a two tier system of wage determination based on enterprise agreements and individual contracts with awards as a residual, from the 1980s. It reviews submissions to the current SNR hearings.   The outcome of the SNR cases is also provided in detail, in the table attached to the brief. It includes the claims and counter claims by the major parties: the Australian Council of Trade Unions (ACTU), the employers, mainly Australian Chamber of Commerce and Industry (ACCI) and the Australian Industry Group (AIG) and State and Federal governments.

How safe?

The use of a term such as the safety net gives rise to a question about how 'safe' is the net? In the financial collapse of the telecommunications company One.Tel, it was revealed (SMH 5 June 2001) that its 1,400 employees were not covered by an award or any registered agreement. According to the relevant union, the CPSU, the company subsequently agreed to meet the terms of the standard award redundancy clause (only) for the purposes of paying employee redundancy entitlements.  So when references are made to the 'award safety net' it should by no means be assumed that this is a universal or inviolable net, applicable to all employees. Indeed another  object of the WR Act is to enable employers and employees to choose the 'most appropriate form of agreement for their particular circumstances, whether or not that form is provided for by this Act ...'. (sec. 3(c) of the WR Act). The employment arrangements used at One.Tel may thus be seen as not inconsistent with this object of the WR Act, even though a further object (sec.3(d) of the WR Act)  refers to the maintenance of  'an effective award safety net of fair and enforceable minimum wages and conditions of employment' yet One.Tel workers were award-free.

The process of making a federal award is initiated by a registered union under its rules and on behalf of its members or future members. The union serves a log of claims upon a group of employers under the jurisdiction of the WR Act. These claims are required by law to create an ambit for a 'paper' industrial dispute under the Constitution's conciliation and arbitration power (s.51(35)). A finding of a dispute will be made. This then allows the resolution of the claims made through the creation of an initial award by the  Australian Industrial Relations Commission (AIRC). Under sec.111 of the WR Act, the AIRC has power to make an award (or avail itself of other options). The award prescribes a range of pay levels and conditions of employment, such as hours of work, annual leave, redundancy, family care leave and other specified matters (sec.89A of the WR Act). However in each of the steps of making a federal award, there are opportunities to thwart the outcome. Thus, evidence of a structured pay and conditions system in place within an enterprise may  persuade the AIRC not to make an award, after a log of claims has been served and other formalities met. The Coalition Government regards the procedures of making a federal award as somewhat anachronistic, and the Hon Peter Reith MP released a number of documents in 2000 criticising the federal award making process and proposed fundamental reform to the formalisation of wages and conditions arrangements under the federal jurisdiction, but indicated awards would still be an option for this purpose. Breaking the Gridlock canvasses the use of the Constitution's corporations power (s.51(20)) in underpinning the relation of corporate employers and their employees. With the ability to make the industrial law changes previously denied, the Prime Minister the Hon John Howard made a statement to the Parliament on 26 May 2005, which, inter alia, foreshadowed that the AIRC's wage fixing role would be largely taken over in the functions of a proposed Australian Fair Pay Commission. New legislation to make these changes is expected to be presented to the Parliament in the latter part of 2005.

Coverage

The ABS updated data on the employee numbers covered by awards in May 2004 (Employee Earnings and Hours Cat. No. 6306). The most common methods of setting pay for all employees were registered collective agreement (38.3 per cent, just on 3.1 million employees) and award only (20.0 per cent or 1.6 million employees). Unregistered collective agreement (2.6 per cent) and registered individual agreement, such as Australian Workplace Agreements (2.4per cent) were the least common methods of setting pay.

Under the Workplace Relations and Other Legislation Amendment Act 1996, existing federal awards are required to be simplified so that they address the 20 allowable matters prescribed by s.89 of the WR Act. The simplification of awards under the auspices of the AIRC has led to awards being set aside, and the 3222 awards of 1996 have been reduced to 1509 by early 2004.

Using award and agreement coverage data presented to the AIRC's Safety Net Review Wage case by the Joint Coalition Governments Submission  2000, it can be inferred that the fewer number of federal awards cover about 3 million employees directly or indirectly; indirectly, because federal awards underpin certified agreements via the 'no disadvantage test'. Where an enterprise is not covered by an award for the purposes of this test, one can be 'designated'. Some States have similar provisions regarding awards and certified agreements, thus the influence of the award safety net tends to be greater than its direct coverage (note that there are generally more federal certified agreements and more employees under them, compared to those in the State jurisdictions).  Note however that the Prime Minister’s May 2005 statement foreshadows discarding the current ‘No Disadvantage Test’ replacing it with a new NDT based not on a relevant or designated award but based on a minimum wage, and four conditions: annual leave, personal leave, parental leave and hours of work provisions, which will have the effect of enticing employers to move employees off awards and on to workplace agreements.

Safety Net Reviews

Safety Net Review Wage Cases (SNR) adjust federal award rates of pay and related allowances. They have been held, more or less annually since 1993. The cases are conducted by the AIRC, upon applications (usually) from unions to increase award wages. Employers and governments also use the forum to submit their views on awards and the economy. Employers most often oppose the union applications and in their recent submissions have proposed some dramatic counter initiatives. Community groups also may make submissions to SNR hearings on issues such as income distribution and social hardship. SNR Cases have succeeded or replaced National Wage Cases (NWC). This brief uses the term safety net review instead of ‘living wage’, as the legislation refers to the safety net.

The 1980s: Transition from National Wage to Safety Net

For the period since the basic wage was replaced by total award rates (1967), National Wage Cases have been a regular and effective device for spreading award wage increases across the labour force. NWC were not the sole mechanism for increasing wages, as 'over-award' negotiations between individuals and/or unions and employers and work value cases have had an important role as well.

By the late 1980s, union disillusionment with a system of formal and informal rules in what had become known as the Accord wages system prompted a search for alternative pay system. The popular view of the disillusionment was that:

  • pay agreements were determined from above by senior union and government officials
  • union leaders became divorced from their members, especially as union amalgamations took place
  • unions were forced to comply with wages outcomes by virtue of the 'no extra claims' commitment required by the AIRC to gain award pay increases
  • industrial action was circumscribed.

Unions envisaged that enterprise agreements would provide access to pay increases particularly in sectors which were profitable and where productivity changes were not being rewarded by the prescribed wage limits outlined by the Accord partners. The resentment of the constraints of the Accord (Long, Stephen.  AFR, 18 March 2000) over restricted access to wage increases is still referred to in union quarters some ten years later. The National Wage decisions between 1986 to 1989 had opened opportunities for employers to pursue workplace efficiencies. By 1989, a comprehensive plan to realign the relativities of award pay rates had been accepted by the AIRC (see Print H9100). The revised pay relativities were to be accompanied with a wider range of duties for the streamlined classifications.

The political context behind the moves away from the award system was one of:

  • sustained critique of the award system,
  • ridicule of the centralised award system by the 'IR' Club and
  • derision at associated complexities of the system.

A comprehensive account of these episodes over the 1980s has been provided in a speech by former AIRC Deputy President George Polites. The Business Council of Australia (BCA) was particularly influential in the late 1980s, arguing in its bulletin that the award system had outlived its usefulness, and indeed was a hindrance to making Australian workplaces productive.

In late 1990, a Full Bench of the AIRC contemplated the gravity of moving from a system of awards to a system of enterprise bargaining. It presented a questionnaire about the consequences of a move to enterprise bargaining, which the parties to the NWC were required to answer (Print K0300).

The AIRC’s questionnaire exercise highlighted the very dramatic changes to the national system of wages should enterprise bargaining be substituted as the principal mechanism for adjusting wages. It asked for views, for example, on the implication of distributing the benefits of productivity growth on an enterprise basis. Hitherto, the AIRC had accepted since the 1960s, that productivity benefits would be distributed on a national basis and so would be available to the bulk of the workforce in the form of improved pay and conditions. One implication (amongst others) was that this would no longer be the case under enterprise bargaining. More likely, the benefits of productivity would be enjoyed by the workforce of an enterprise (and by shareholders and customers).

In October 1991, the AIRC agreed to the concept of allowing enterprise agreements to be registered as schedules to the parent awards (Print K0300). Some foresaw that a change of this magnitude would essentially weaken the award system as it then operated. Thus the predecessor of the Australian Industry Group, the Metal Trades Industry Association questioned its ongoing commitment to the award system as the primary means of settling pay disputes, although it had been suspicious of enterprise bargaining where this involves an industry wide claim and industrial action.

The Industrial Relations Reform Act 1993 introduced the award safety net prescribing that awards (other than paid rates awards) act as a safety net of minimum wages and conditions of employment underpinning direct bargaining. It did this by amendment to the principal law, the Industrial Relations Act 1988. For some years prior to the 1993 amendment, governments, unions and employers grappled with the possible opportunities and consequences of moving from the award system to decentralised wage bargaining. They initially attempted to have the rules or principles made by the AIRC modified to recognise workplace or enterprise agreements.

While the AIRC did concede to the pressure and developed an enterprise bargaining principle as part of its wage fixing principles in 1991, the Government sought to further cement enterprise bargaining via legislation in the Industrial Relations Legislation Amendment Act 1992. The Act restricted the veto powers of the AIRC in the approval process of single-enterprise agreements (i.e. where these agreements would conflict with a public interest test) and introduced a strong no disadvantage test. The Industrial Relations Reform Act 1993 allowed non-union agreements to be certified (where employees were employed by constitutional corporations), in addition to union agreements. These agreements continue (WR Act s.170LK).

The initiatives toward decentralisation and enterprise agreements raised the issue as to what role might be performed by awards and the award structure in a system where employment conditions and remuneration are determined largely under an alternative system to awards. The answer envisaged at the time was that awards were to assume more of a safety net role. Prime Minister Keating outlined this reserve function for safety net awards in an address to the Australian Institute of Company Directors in 1993, quoted in a speech by the Hon Peter Reith MP:

  • The safety net would not be intended to prescribe the actual conditions of work of most employees, but only to catch those unable to make workplace agreements with employers. Over time the safety net would inevitably become simpler. We would have fewer awards, with fewer clauses.

The then Government used these reviews to enunciate a framework for future core award conditions, as noted the account by Deputy President Polites. The following ‘core award conditions’ were nominated by the Government submission in the September 1994 safety net review (Print L4700). They were identified as:

  • minimum wage,
  • key leave elements,
  • hours of work,
  • TCR (termination, change and redundancy),
  • superannuation (as per the test case),
  • public holidays (as per the test case),
  • mode of employment,
  • union right of entry,
  • dispute settlement procedure,
  • support of the principle for equal pay for equal work and
  • industry specific conditions identified on an award by award basis reflecting widely accepted standards justified by important industry and other specific circumstances.

In other words, as enterprise agreements were to expand both in respect of the subject matter they covered and the proportion of the workforce covered by them. Awards were intended to recede both in respect of the scope of their provisions and the numbers of employees covered directly under them. Since awards were no longer intended to be the principal instrument that described actual pay and conditions of employment in most enterprises, awards would become safety net awards. The reduction of provisions under awards has been facilitated through sections 88 and 89 of the Workplace Relations Act, and through the transitional provisions (items 49-51 of the Act which ‘created’ the WR Act - the Workplace Relations and Other Legislation Amendment Act 1996). Currently, 20 allowable matters are listed under s.89A(2) many of which reflect the award matters proposed in 1994, although union right of entry is not one.

Relation of Awards to Enterprise Agreements

Award rates act as a foundation for enterprise bargaining agreements, in the federal jurisdiction these are referred to as certified agreements (CAs) and are collective agreements, (usually negotiated with a union or an enterprise workforce) and Australian Workplace Agreements (AWAs, which are individual agreements). Part V1E of the Workplace Relations Act 1996 sets out the ‘No Disadvantage test’ (initially separately provided for in the 1993 legislation) which applies both to CAs and AWAs.

Section 170XA(2) stipulates that an agreement disadvantages employees if it results in the reduction of overall terms and conditions of the employees under the relevant (or designated) awards. SNR decisions assume an importance by having an influence on enterprise and individual bargaining given that they act as the base for setting actual pay rates received by employees under these other arrangements. So, if award rates are increased due to a SNR decision then it will be all the more difficult to set rates of pay at or below the new award rates in certified or other agreements (although not impossible e.g. in the case of 'short term' business difficulties).

In short, SNR decisions underpin bargaining for those in the workforce who may be entitled to higher pay rates than those expressed in their awards, and for those who cannot access bargains, then the awards provide a basic standard of living. The AIRC has traditionally had a primary role in determining award wages and the principles by which these are made and varied. It follows that the process of setting these award rates will be the source of contention between employers, governments and unions and will also be one factor in the distribution of national income.

Safety Net Claims and Outcomes

Under the three Safety Net Reviews from 1993 to 1995, an increase in award rates of $8.00 per week was awarded in each case, with the first subject to an 'absorption' test. This meant that where actual pay rates were higher than prescribed under the new rate which included the $8.00, the increase need not be paid in part or full. As noted, the reviews of 1994 and 1995 also allowed the parties to express their views on the future of the award system.

The 1997 safety net decision (Print P1997) established a federal minimum award wage at that time of $359.40. The ACTU put the argument for a uniform minimum rate as part of its 'Living Wage' claim. This claim also sought successive increments to lift award rates to a minimum of $12.00 per hour phased in over 3 stages, as well as pay increases for those who had not had these since 1996. In its response the ACCI suggested reviving the dormant minimum wage which was calculated to be about $260.00, being a 'not elsewhere employed' classification in the Metal Industry Award. ACCI suggested a small increase to this minimum rate. Instead the AIRC increased award rates by $10.00, while Deputy President Ross issued a dissenting decision containing higher rates. The eventuality was that a federal minimum wage of $359.40 was set, being the existing lowest actual paid adult rate in the Metal Industry Award including the proposed $10.00.

The 1998 safety net review commenced with the ACTU seeking to modify its 1997 Living Wage submission for a two-part increase of the minimum wage to $418.00. In the 1998 safety net decision (Print Q1998)  AIRC awarded $14.00 for those on award rates to $550.00, $12.00 for those between $550.00 and $700.00 and for rates over $700.00, $10.00. The minimum wage was increased to $373.40.

The 1999 safety net review commenced by the ACTU making an application for $26.00 for award rates up to $527.80 and for all award rates above that level. The federal and Coalition State Governments agreed to a modest increase of $8.00 and capped at the C10 rate of the Metals Award (i.e. $465.20). The Victorian employers organisation (VECCI) used the 1999 Review to try to significantly extend the minimum wage as the principal rate by which all classification rates in agreements would be compared with. This proposed role of the federal minimum wage according to the AIRC would be to:

  • operate as the "benchmark wages comparator" for the purpose of the no-disadvantage test set out in s.170XA of the Act
  • provide that the federal minimum wage will not be used to calculate overtime, penalty rates and allowances
  • break the current link between the federal minimum wage and the award wages system

The AIRC refused the VECCI request. The 1999 safety net decision (Print R1999) increased award rates up to and including $510 pw by $12.00, and by $10.00 for award rates above $510 and a new minimum rate of $385.40.

However a similar proposal was put by VECCI in its 2000 submission. On this occasion VECCI proposed an award clause which is designed to apply to businesses who would be covered by the award but who have not employed anyone. Such an employee would be paid the federal minimum wage for up to 6 months and indefinitely if the new employees sign an AWA or are covered by a Certified Agreement. The claim was couched in terms of assisting the reduction in unemployment by encouraging business growth in the services sector, particularly the restaurant and hospitality industries.

The ACTU claimed $24.00 for award rates up to and including the C7 rate in the Metal Engineering Award ($537.80) or 4.5 per cent increase in rates above this. The Coalition governments supported an $8.00 increase for awards up to the C10 level ($477.20). The 2000 safety net decision (Print S5000) given by the AIRC on 2 May 2000 allowed award rates to be increased by $15.00. This raises the federal minimum wage to $400.40. The increase is to apply to all award rates.

The 2001 safety net decision (PR002001) was derived from an initial ACTU claim of $28 per week for classifications up to and including the C10 classification in the Metal Engineering and Associated Industries Award 1998 (Part 1), and a 5.7 per cent increase for classifications above that level. (The C10 classification applies to a base tradesperson's rate of $492.20 as at April 2001). The claim also sought appropriate increases in related allowances. The Joint Coalition Governments opposed the claim but supported a flat money increase and capped to the C10 level. The State Labor Governments supported the ACTU claim, but in the alternative proposed an increase in line with what the evidence put to the AIRC indicated. The ACCI submitted that any increase be limited to the minimum wage (then $400.40). The AIG was concerned at the compression of pay rates across skill levels, which came about from awarding flat money increases.

The 2001 SNR decision awarded a three tier increase:

  • $13.00 per week increase in award rates up to and including $490 pw
  • $15.00 for classifications above $490 to $590
  • $17.00 for classifications above $590
  • the federal minimum wage increased to $413.40

In May 2002, the SNR decision (PR002002) increased federal award rates by $18.00. In part, the decision corrects the 2001 SNR decision in which the AIRC considered the economy less able to afford a higher increase. However in 2002, the much more buoyant economic conditions were relied on to base a higher increase. In the course of submissions, evidence was presented showing GDP growth to increase by more than 3 per cent in 2001-2002 and the rate of unemployment appears to be declining. The Federal Government introduced the result of econometric modeling which showed a possible increase in unemployment should the full ACTU claim be granted.

In the 2003 SNW hearings, ACCI submitted that the ACTU's claim should be rejected because it was ill-timed, economically irresponsible and not industrially justified. It submitted that the award safety net is not currently in need of adjustment and that there should be no increase at this time. In the alternative, if the Commission awarded an increase it should be moderate. The Australian Industry Group and the Engineering Employers Association, South Australia (jointly AiG) supported an increase of $11 per week to award rates of pay, subject to the principle of absorption. AiG submitted that the increase of $24.60 claimed by the ACTU would result in an overall net detriment for both employers and low-income earners, although it conceded that some low-income earners would benefit. The National Farmers' Federation (NFF) also opposed any increase. However, it submitted in the alternative that if the Commission was inclined to award an increase the detrimental impact of drought on rural businesses should be given substantial weight in determining the amount of the increase. It also sought a modification to the Commission's Economic Incapacity Principle to the effect that qualification for the Commonwealth's "exceptional circumstances" assistance for employers affected by the drought ought to be taken as satisfying the requirements of that principle.

The AIRC rejected the claim for drought- and hardship-affected farmers to be automatically given a 12-month extension on paying the safety net rise. However, it said the NFF's proposed criteria would definitely be a "relevant consideration" for the Commission when deciding if particular enterprises should get relief. The AIRC recommended the Federal Government conduct an authoritative survey on the employment effects of safety net adjustments in Australia. On 6 May the AIRC awarded a $17 safety net increase (up to $731.80 a week - the level C2A ) while those above this rate receive $15. The strong productivity growth of 3.8% in the past year, on the back of continuing growth during the current economic cycle, provided no support for any suggestion that safety net increases have a negative impact on productivity.

In the 2004 SNW case, ACCI, the AIG and the Federal Government supported a $10 increase in the federal award safety net in response to the ACTU's $26.60 claim (capped at the C10 level), although the AIG backed a $10 rise in all award classifications. The AIG proposed a new wage principle of a commitment to continuous improvement in productivity and efficiency in response to poor labour productivity gains. AiG also proposed a test case to establish an award safety net for the newly-referred Victorian common rule award system (now underway). ACCI sought a 28-day notice period before employers are obliged to pass on any 2004 safety net increase.

The bench refused to accept submissions from the Federal Government and others that the ACTU claim would discourage workplace bargaining. The bench said bargaining was not a "practical possibility" for workers with no bargaining power, who are those protected by safety net rises. It also noted that the recent substantial safety net increases had been "accompanied by a steady growth in the number of employees covered by agreements". The AIRC raised "serious doubts" about the reliability of evidence on the employment effects of minimum wage increases (i.e. allegations that the 2003 SNW decision cost 14 000 jobs). The bench said the economy presented no barrier to awarding a substantial increase, with GDP remaining strong, a recovery in the rural sector, inflation low, unemployment creeping "steadily lower", productivity increasing at satisfactory rates (3.2%), profits remaining high and economic expansion continuing. The AIRC noted that "for certain household types the federal minimum wage is significantly below the amount which is necessary to provide a modest living standard for those households in the context of living standards generally prevailing in the Australian community", but did not accept an ACTU proposal to review minimum award pay rates.

The 2005 SNW hearings were conducted in the context of ministerial announcements that federal wage fixing and agreement-making were to change significantly after the Government gained control of the Senate from July 2005. Nevertheless, the data presented to the AIRC showed that its minimum wage increases had been moderate in the context of general economic performance.

Between May 1996 and May 2004 average weekly earnings of full-time adults had increased by $277.10 per week or 41 per cent. In the same period the minimum wage, the rate for the C14 classification level, increased by $118 per week or 34 per cent. The award wage for a tradesperson, the rate for the C10 classification, increased by $120 per week or 27 per cent and wages at the higher classification levels had increased by proportionately lesser amounts. Over the same period average weekly ordinary time earnings for full-time adults had increased by 16.6 per cent in real terms, while the minimum wage only increased by 10.5 per cent in real terms. Real unit labour costs had fallen by 5.1 per cent since 1996-97. GDP per hour worked in the market sector increased by 24.3 per cent over the period, while employment increased by 19 per cent and the number of unemployed decreased by 26 per cent to 5.1 per cent currently.

The Commonwealth also contended that "Australia now has the highest minimum wage compared with median earnings . . . in the OECD", a proposition which was generally accepted. However the AIRC noted that this relationship was not a recent development, it was more or less the case for almost 20 years (A number of European countries notably France have had similar ratios at different times). More importantly, the AIRC noted that despite the ‘high’ minimum wage v median earnings allegation, the relationship between the minimum wage and median earnings had been in decline since 1996, indicating falling value of the minimum wage.

On the vagaries of econometric modelling, the AIRC pointed to last year’s reliance by the Commonwealth upon a study which showed an elasticity of demand for labour of -0.21 per cent, while in 2005 it urged the AIRC to accept a study which showed an elasticity of -0.63 per cent. As the 2005 decision noted: ‘We do not draw attention to this inconsistency to be critical of the Commonwealth but to underline the need for a cautious approach to estimates of the employment effects’.

The AIRC was critical that the Commonwealth could not provide data concerning the proportion of the workforce to which the minimum wage adjustment applied in 1997 and 2004, as the AIRC observed: ‘It is a matter of significance that while the Commonwealth has criticised the Commission's past decisions because of their employment effects, the most basic of information about safety net adjustments and the minimum wage-how many people are affected by them-is apparently not available to the Commonwealth’.

Conclusion

The wage determination system has moved from centralised determination through National Wage Cases towards an enterprise bargaining framework in which the national determinations form part of the safety net and apply only to those (mainly low paid) workers who are unable to secure wage increases under enterprise bargaining. To most observers the 'system' appears to generate the best of both enterprise agreements and centralised wage determination, and appears to be a very Australian solution to wages policy at this point.
The question of constitutional authority for federal law is central to the Government's workplace agenda. In the run-up to the Australia’s federal election in 2004 the Minister for Employment and Workplace Relations has revived a proposal to extend the federal jurisdiction using the Australian Constitution's corporations power (i.e., the constitutional power which allows the Commonwealth to regulate the trading activities of corporations; see earlier Discussion Papers on this proposal)
While the AIRC retains the authority to conduct safety net reviews, this function could be replaced under a regime where Parliament set these conditions, or Parliament could determine that a hybrid system be used instead of the AIRC. The Government has previously considered a review of the conduct of safety net review cases with the aim of adding to the AIRC Full Bench, members of the Productivity Commission and the Reserve Bank to form a new 'panel' (letter to the Prime Minister). The continued role of the safety net review in its current form should not be expected. Indeed the Prime Ministerial statement of May 2005 foreshadowed legislation which is intended to terminate the AIRC’s safety net award determinations.
In the meantime it can be concluded that, as would be required, the AIRC has complied with its legislative directive to maintain a safety net of minimum wages and conditions in the context of living standards generally prevailing in the Australian community. Through its SNR decisions it has, in all likelihood, acted as an offset to the trend of widening wage dispersion.

National Wage and Safety Net Claims and Outcomes 1991-2004

  Claim Government position CAI/ACCI and AIG/MTIA response Outcome
1990 Move by ACTU to implement Accord 6 via enterprise bargaining, essentially outside the AIRC.

November: ACTU claim for $12.00 from 16 May 1991, + additional 3% superannuation from 1 May.

(see below) (see below) Sept: AIRC issues decision acknowledging enterprise bargaining Print J4700
1991 (follows from above) claims) The ACTU claims were supported by the Commonwealth Government and the Governments of Victoria, Western Australia, South Australia, Tasmania and Queensland.

The CAI opposed the $12.00 per week across the board increase. It argued that the Commission should defer consideration of the claim until closer to the date sought by the ACTU (May 1991)

MTIA and MTFU agreed on a $12.00 per week increase, plus 2 payments of 2.5% plus an increase of Employer Superannuation contributions of 1%

 

 

16 April 1991: $12.00 refused – 2.5% available from 16 April Print K7400

October 1991: enterprise bargaining adopted via s.112/115 agreements. Print K0300.

1992 ACTU flagged a general wage increase in 1992   ACCI responded that any general wage increase would be bitterly contested, as unemployment was No decision
1993 ACTU sought recision of the Oct 1991 principles and a wages system according to Accord Mk 7 which included $8.00 for those not able to strike workplace agreements Commonwealth supported Accord Mk 7 ACCI/MTIA supported enterprise bargaining but not Accord Mk 7. They also argued that awards should be simplified to form a true basis for enterprise bargaining and supported the removal of award-based superannuation provisions The Commission gave two decisions in the October 1993 Review of Wage Fixing Principles, 25 October 1993 Print K9700, and 15 November 1993 Supplementary decision, Print K9940, These decisions awarded an increase of $8 per week in award supplementary payments, but also revamped wage fixing principles.
1994 An $8.00 per week wage increase to employees who have not received wage increases of this level (other than Minimum Rates Adjustment or Structural Efficiency Adjustment) since 1991. 2. Another safety net adjustment of $8.00 per week to employees who have not received an increase through enterprise bargaining.

A further safety net adjustment for employees of $8.00 per week from the 1st July, 1995.

The Commonwealth supported the ACTU claim. Note that the Commonwealth supported an extensive review of awards under s.150A, and proposed 'foundation' and non-foundation' clauses ACCI: Defer the claim indefinitely. perhaps until awards are fully restructured through s.150A reviews.

MTIA: No increase should be granted. Any consideration of the safety net adjustment claim should be deferred.

August 1994 Review of Wage Fixing Principles: confirms 2 more safety net adjustments of $8.00 Print L4700

21 September 1994 Safety Net Adjustment and Review Print L5300

1995 Third Safety Net Review The Commonwealth, New South Wales and Queensland, supported the adjustment. ACCI and NFF were opposed to the granting of the third arbitrated safety net adjustment.

MTIA, gave qualified support to the third arbitrated safety net adjustment.

October 1995 Third Safety Net Adjustment and Section 150A Review. Print M5600: Confirmed availability of 3rd $8.00
1997 ACTU seeks 'Living Wage' increases in award rates, equivalent to 8.75%, this % includes the $20.00 claim for those who have not had increases from enterprise bargaining, beyond the $24.00 since Nov.1991. Joint Governments(Cth, ACT, WA, SA, NT, Vic, Qld, Tas):

1) The claim should be rejected.

2)A flat $8 per week increase should be applied to minimum rates awards.

New South Wales: The claim should be granted.

ACCI: (1) The claim should be rejected and no increase should be awarded.

(2) If the Commission decides to award an increase, an option would be to award a special allowance e.g. $5 per week for employees on award rates in the range of $350-388 per week.

 

22 April 1997 Safety Net Review - Wages: $10.00 awarded.

New Minimum Wage (lowest adult rate in Metal Industry Award) set at $359.40. Print P 1997

1998 ACTU Claim

Stage 1: effect from 22/4/98: minimum weekly rate of $380.00 ($20.60 increase); $20.00 wage increase for all workers since 1 July 1996, or 3rd $8.00 which ever is later.

Stage 2: Effect from 22/4/99: Minimum wage of $418.00, through either $38.00 increase, or 7.7% with commensurate increases for other classifications;

 

Joint Govts (Cth, ACT, WA, SA, NT, Vic, Qld, Tas opposed the claim

Proposed $8.00 from 22/4/98 & 2nd $8.00 from 22/4/99

Increases should apply to the minimum wage;

No increases for those above metal tradesman classification

NSW: Stage 1 should be granted

ACCI: claim should be rejected. If this is not accepted, then a modest SN increase should apply with a 12 month space from the date of last increase in any award. The increase can be absorbed; a programme re award simplification has been established and the federal minimum wage is put into any award which does not have it

MTIA: rejected claim. A flat $8.00 should apply to award rates and minimum wage from 22 April 1998.

 

Decision 29 April 1998: Safety Net Review - Wages:

To award rates to $550 pw - $14.00 granted.

For award rates from $551 - $700 - $12.00

For award rates over $700 - $10.00.

Minimum Wage increased to $373.40. Print Q 1998

1999 $26.60 per week for all award rates of pay up to $527.80 per week C7 in the Metal Industry)

5% for all award rates of pay above that level, Commensurate adjustment of allowances and service increments,

Joint Governments: (Cth, ACT, NT, SA, WA, Vic):The ACTU's wage claim should be rejected. Instead there should be an $8 per week safety net adjustment to C10 level.

NSW: Supports the ACTU's wage claim.

Queensland supports the ACTU's wage claim.

Tasmania supports the ACTU's wage claim.

ACCI/NFF: The hearing of the ACTU's wage claim should be deferred.

VECCI/AHA: the minimum wage should operate as the benchmark wages comparator for the purposes of the no disadvantage test in the certification of agreements

AIG: The ACTU's wage claim should be rejected. A flat adjustment of $8 per week should be applied to all award rates of pay and to the minimum wage.

The adjustment is to be payable not before 22 April 1999.

The adjustment is to be fully absorbable into overaward payments, irrespective of whether they reflect formal or informal agreements or individual arrangements.

Safety Net Wages - Review given on 29/4/99:

$12.00 for rates up to $510; $10.00 for rates above this. New minimum award rate of $385.40. Print R 1999.

2000 ACTU claim for $24 in award pay rates up to and including classification C7 (currently $537.80) in the Metals Engineering Award, and 4.5% for classifications above this . (lodged Oct 99) Federal and Coalition State Governments oppose $24; agree that $8 should be awarded to below trade classifications up to the C10 trade rate of $477.20.

State Labor Governments support the ACTU application

ACCI: request the AIRC defer hearing the claim. Submits that new employees in start-up businesses be paid the minimum wage ($385.40) for up to 6 months and be paid the minimum wage indefinitely if they are employed under a certified agreement or AWA. AIRC decision increases all rates by a uniform $15.00. Rejects VECCI proposal for an induction wage.

Minimum wage: $400.40

2 May 2000. Print S5000

2001 ACTU claim for $28 for classifications up to C10 ($492), and 5.7% above that Coalition Governments oppose the claim. Proposed a $10 increase in rates to C10 level.

Labor States supported the ACTU claim, but in the alternative supported an increase consistent with the evidence

ACCI, AHA and NFF and others submitted that a $10 increase be confined to the minimum wage. ACCI proposed an additional 12 months delay between the times when awards are varied for an SNR increase. AIG supported a flat $ amount. AIRC increased rates by:

$13 for rates to $490

$15 for rates over $490 to $590

$17 for rates over $590

Minimum wage $413.40

2 May 2001 PR002001

2002 ACTU claim for $25.00 for all award pay rates Labor States supported the claim. Federal Government proposed $10.00 increase for all pay rates to the C10 level ($507) ACCI opposed ACTU claim and instead proposed $10.00 increase at the minimum wage level ($413.40) AIRC granted $18.00 increase to all award pay rates.
Minimum wage $431.40

9 May 2002 PR002002

2003 ACTU claim for $24.60 in all award rates. Labor States supported an increase in award rates of $18.00.
Commonwealth did not oppose an increase in award rates of up to $12.00 but for award rates at the Metal Award’s C10 rate ($525.20), or below
ACCI opposed the claim.
AIG proposed $11.00 subject to absorption.
NFF opposed any increase and argued a farmer’s status of ‘exceptional circumstances’ should satisfy the economic incapacity principle.
AIRC granted
$17.00 for award rates up to $731.80 [Metal Award’s C2(a) rate] and $15.00 for rates higher than this. New Minimum Wage of $448.40.
See decision PR002003,
6 May 2003
2004 ACTU claim for $26.60 The Commonwealth relied on the Harding report on the effect of minimum wage rises costing jobs. Labor state govts supported $20. Cth agreed to a $10 up to the C10 level. ACCI and AiG supported a $10 increase, ACCI capped at the C10 level, AiG applying to all award rates. ACCI sought a 28 day notice period for employers before passing on any increase in award rates. AiG sought a new commitment to continuous improvement in productivity and efficiency

The AIRC awarded increase of $19 for all awards on 5 May 2004: PR002004 The minimum wage increases to $467.40, and the C10 rate is now $561.20

2005 ACTU claim for $26.60 State & Territory govts proposed $20 increase to all award rates.
Cwth Govt proposed $11 for C14 to C10 rates.


ACCI & NFF proposed $10 increase to equiv of C14 to C10 rates in the Metals award
AIG proposed $11 for all award rates.

The AIRC awarded a $17 on 7 June 2005 to all award rates bringing the federal minimum wage to $484.40
PR002005

Further Reading

The Accord

P. Ewer et al., Politics and the Accord (Pluto Press 1991). Michael Easson and Tom Forrest: ‘Good while it lasted: the position and prospects of Australian Unions in 1993’ The Economic and Labour Relations Review v.5,n.1 1994.

The IR Club

Gerard Henderson 'The Industrial Relations Club' in J. Hyde and and J. Nurick, eds, The Wages Wasteland, (Hale and Ironmonger, 1985). The 'Club' was made up of union officials, employer association advocates, representatives of the federal Department for Employment and Industrial Relations and the AIRC.

Safety net awards

D. Peetz, 'The Safety Net, Bargaining and the Role of the Australian Industrial Relations Commission', Journal of Industrial Relations, v. 40, n. 4, 1998, p. 535

Labour market deregulation

Metal Trades Industry Association (MTIA) pamphlet: Deregulation of the Labour Market: A Risky Business, (January 1991)

 

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