Good morning. 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.
The panel received submissions from the Australian Government, several state governments, unions and
employers, other entities and individuals. The proposals in respect of the adjustment of the
national minimum wage and modern award minimum wages were sharply polarized. The ACTU proposed a
4% increase. Other parties also proposed increases of varying amounts. The Australian Chamber
of Commerce and Industry ACCI, AI Group and a number of other employer bodies, proposed that
there should be no increase to minimum wages. The Australian Government did not propose a specific
outcome but urged the panel to take a cautious approach and to prioritize keeping Australians in
jobs and maintaining the viability of businesses. The majority of the panel have decided to award
an increase in minimum wages. Chapter one of the decision sets out the reasoning of the majority,
the rates set for the National Minimum Wage Order and the determinations we have made in respect
of modern award minimum wages. In our decision we note that the Australian economy is going through
a significant downturn and is almost certain to enter a recession - the first in almost 30
years. It has been 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 has been unprecedented. The unemployment rate has
increased, the number of hours worked has fallen, and there has been a substantial increase in
underemployment. The form and shape of the pathway to recovery is uncertain and heavily contested,
but it is generally accepted that it is largely dependent on how well the spread of the virus
is contained. There are some indications that the economy is beginning to recover, but the outlook,
including the nature and speed of the expected recovery, remains highly uncertain. There are
significant downside risks in the period ahead, including the international outlook,
which remains highly uncertain, the future of fiscal support to the domestic economy,
including through the JobKeeper scheme, and there is a risk of a second wave of COVID-19 infection
and the re-imposition of extensive restrictions. The majority of the panel accept that the economic
considerations we are required to take into account weigh in favour of greater moderation
in terms of the outcome of the review. The shock to the labour market warrants more weight being
given to the potential impact of increasing minimum wages on hiring and re-employment,
but the economic considerations are not the only matters the panel is required to take into
account. We are also required to take into account other factors including relative living standards
and the needs of the low-paid. The latest year for which data is available shows an increase in the
proportion of low-paid households experiencing financial stress. Some low-paid households are
plainly experiencing significant disadvantage. An increase in minimum wages would assist these
employees to better meet their needs. If we were to award no increase it would amount to a real
wage cut. This would mean that many award-reliant employees, particularly low-paid employees,
would be less able to meet their needs. For some households it would lead to further
disadvantage and may place them at a greater risk of moving into poverty. The prevailing economic
circumstances and the uncertainty surrounding the pathway out of recession have led us to adopt a
cautious approach to both the quantum and the timing of an adjustment to minimum wages. Last
year the panel awarded a 3% increase. The majority have decided to award a substantially lower
increase this year due to the marked change in the economic environment and the recent tax transfer
and other changes which have benefited low-paid households. We have concluded that in the present
economic circumstances awarding an increase of the size proposed by the ACTU would pose a real
risk of disemployment and of adversely affecting the employment opportunities of the low-skilled
and young workers. The factors identified in our decision have led us to award an increase
of 1.75%. The national minimum wage will be set at $753.80 per week or $19.84 per hour. This amounts
to an increase of $13 per week. Modern award minimum wages will also be increased by 1.75%. I
now want to turn to the timing of those increases. ACCI submitted that any increase awarded should
not operate before 1 January 2021. AI Group submitted that any increase should operate after
1 January 2021. The ACTU opposed any deferral of an increase to minimum wages. The Fair Work
Act provides that minimum wage adjustments usually take effect from 1 July in the year of the review,
unless there are exceptional circumstances justifying a later date of operation. The
determination of any later date of operation must be limited to the particular situation to which
the exceptional circumstances relate. The impact of the COVID-19 pandemic has been felt across
the economy but the extent of its impact has not been consistent across all sectors of the economy.
While some industries have been substantially affected other sectors have been affected to
a much lesser extent. Using administrative data from the Australian Tax Office published by the
ABS this chart shows the percentage changes in the number of payroll jobs and total wages for
a range of industries. Industries with a larger number of jobs are represented by the largest
circles. The decline in jobs is shown along the horizontal axis and the change in wages on the
vertical axis. You can see from the charts that the decline in total jobs falls broadly into three
industry clusters. In the upper cluster total jobs fell by 29.1% in accommodation and food services
and by 26.3% in arts and recreation services. In the central cluster job losses range from 10.5%
in information media and telecommunications to 4% in manufacturing, and in the lower cluster
there was a small increase in jobs in electricity, gas, water and waste services, and in finance and
insurance services. The industries in the central and lower clusters are shown more clearly in this
chart. The majority concluded that the data showing the different impact of the pandemic on
particular industry sectors and the requirements of the Act warranted a more nuanced approach than
the general deferral approach advocated by ACCI and AI Group we have decided to
determine different operative dates for different groups of modern awards as shown in this slide.
The modern awards in Group 1 cover industries which have been less affected by the pandemic
than those covered in groups 2 and 3, and in addition includes modern awards applying to
frontline health care and social assistance workers, teachers and child care workers,
and employees engaged in other essential services, who have continued working throughout
the pandemic to keep the community safe, to protect the vulnerable and those at risk,
and to keep the economy functioning. The variation determinations in respect of these awards in Group
1 will come into operation on 1 July 2020. We estimate that about 25% of award-reliant employees
are covered by the modern Awards in Group 1. The modern Awards in Group 2 cover industry sectors
adversely affected by the pandemic but not to the same extent as the sectors covered by the Group
3 Awards. These are the awards in the central cluster in the chart shown earlier. The variation
determinations in respect of these modern awards will come into operation on 1 November 2020. We
estimate that about 40% of award-reliant employees are covered by the modern awards in this group,
Group 2. The modern Awards in Group 3 cover the industry sectors which have been most adversely
affected by the pandemic: accommodation and food services, arts and recreation services,
aviation, retail trade and tourism. The variation determinations in respect of these modern awards
will come into operation on 1 February 2021. We estimate that over one-third of award-reliant
employees are covered by the modern awards in Group 3. The categorization of modern
Awards into these three groups is based on the data set out earlier in the charts,
the restrictions imposed to contain the virus, and the submissions before us. In our decision
we acknowledge the limitations of the data and we accept that the categorization is imperfect,
but on the information available we are satisfied that the operative dates we have determined are
justified. We also acknowledge that the different operative dates we have determined for the three
award groups in this review may have implications for the timing of any variation in modern award
minimum wages in next year's review. In a separate decision Professor Wooden decided
that the appropriate course in the current review was to award no increase in minimum wages. It is
Professor Wooden's view that the risks are weighed in one direction and that in the current economic
circumstances the requirement to provide an adequate safety net of fair minimum wages
should lead the panel to prioritize growth in jobs and hours over a wage increase. In his decision
Professor Wooden observes that a zero increase this year will do little damage to workers and
will still leave minimum wage workers far better off than they were a decade ago. We will now
publish our decision on our website, a copy will also be sent to all subscribers. Draft variation
determinations will be published later today. Interested parties will be required to submit any
corrections or amendments by no later than 5:00 p.m. on Thursday the 25th of June [2020]. I want
to conclude by expressing the panel's appreciation to the parties who participated in the review for
their contributions, and to the staff of the Commission for their assistance. Thank you.