Good afternoon. The decision we are issuing today deals with this year's annual wage review.
The decision directly affects over 2.2 million employees and indirectly affects many more.
This year the panel received submissions from the Australian Government,
several state governments, unions and employers, other entities and individuals.
The ACTU proposed a 3.5% increase. Other parties also proposed increases of varying amounts.
The Australian Chamber of Commerce and Industry,
AI Group and a number of other employer bodies proposed an increase of 1.1%.
We accept that our decision-making process should be as transparent as possible.
Accordingly we disclose the factors which are most relevant in a particular year
and we have done so in this decision.
The most significant change in circumstances in the past 12 months
has been in the economic environment and outlook.
At the time of last year's decision the Australian economy was going through a significant downturn
and was about to enter into a recession – the first in almost 30 years – caused
by a health crisis and the impact of measures to prevent the spread of the COVID-19 virus.
The shock to the labour market had been unprecedented. The unemployment rate increased,
the number of hours worked fell, and the participation rate declined.
Last year the form and shape of the pathway to recovery was uncertain and heavily contested.
The present circumstances are very different.
There was a broad consensus in the submissions before us that the current performance of the
economy has exceeded expectations, and that the economic recovery is well underway.
Most economic indicators showed an improvement during the second half of last year.
Data for the early part of this year have continued to be positive. While the economic
recovery is well underway and the overall outlook is much more positive than it was last year,
we acknowledge that there are downside risks. In particular the risk of domestic outbreaks and of
ongoing disruptions to other major economies. The pace of the vaccine rollout also remains a risk.
Consistent with the position we have taken in past review decisions,
we have taken into account the half a percentage point increase in the
superannuation guarantee rate in determining the level of increases in this review.
But we have not applied a direct quantifiable discount to the minimum wage increase.
Last year the majority of the panel awarded a 1.75% increase.
The markedly better economic environment, the scheduled superannuation increase and
the tax transfer changes have all been taken into account. Taking all the considerations
into account they weigh in favour of a higher increase than was awarded in last year's decision.
The matters identified in our decision have led us to award an increase of 2.5%.
The national minimum wage will be $772.60 per week or $20.33 per hour. This amounts
to an increase of $18.80 per week. Modern award minimum wages will also be increased by 2.5%.
I now turn to the timing of these increases.
Absent exceptional circumstances, the Fair Work Act provides that variations to a
national minimum wage order and to modern award minimum wages arising from a review
are to operate from 1 July in the financial year following the review.
A strong case must be made out in order to warrant the deferral
of a wage determination arising from a review. We are satisfied that exceptional circumstances exist
such as to warrant a delayed operative date for certain modern awards.
The variation determinations in the modern awards in the aviation and tourism sectors,
the fitness industry award and certain retail trade sector awards will come into operation
on 1 November 2021. The variation determination in respect of the general retail industry award
will come into operation on 1 September 2021.
For all of the remaining modern awards we were not persuaded that there were
exceptional circumstances such as to warrant a delayed operative date.
The variation determinations for all of those awards will operate from 1 July 2021.
The decisions we have made about the operative dates of the variation determinations are based
on the factors set out in our decision. We have acknowledged the limitations of the data
and we accept that the categorization we have adopted is imperfect. But,
on the available information, we are satisfied that the operative dates we have determined
are justified, consistent with the statutory framework,
and strike an appropriate balance between the interests of employers and employees.
We acknowledge that an operative date of 1 July 2021 will mean that for some businesses covered
by some of these modern awards they may face two minimum wage increases within a 12-month period.
But those businesses have also had the benefit of the delayed operative date
arising from last year's decision.
We will now publish our decision. Draft variation determinations will be published later this week.
Interested parties will have an opportunity to comment on them
and to submit any corrections or amendments by no later than 5 pm on Thursday, 24 June 2021.
I want to conclude by expressing the panel's appreciation
to the parties who have participated in the review for their contributions
and to the staff of the Commission for their assistance. Thank you.