Annual Wage Review – Ai Group releases its position on a proposed minimum wage increase

The Chief Executive of the national employer association Ai Group, Innes Willox, said: "It is critical that the Fair Work Commission (FWC) takes a very cautious approach in determining the level of any minimum wage increase this year. While Australia's economy has bounced back at a faster and stronger pace than had been anticipated (reflecting the size, speed and success of various economic support measures), the effects of the pandemic and recession are ongoing.

"There are many hurdles to a complete recovery. The global pandemic is continuing and the level of infections in many countries is increasing rapidly. Major travel restrictions are set to remain in place in Australia for at least the next 12 months. The inability of businesses to access overseas workers is leading to widespread skill and labour shortages. These shortages are impacting upon business viability, growth and productivity.

"The distribution of economic loss and recovery has been extremely uneven to date across locations, industries, occupations and demographic groups around Australia. A minimum wage increase is a very blunt instrument and cannot be readily tailored to the needs of particular employees and businesses.

"In the current circumstances, Ai Group will propose to the FWC that a cautious rise of 1.1% in the National Minimum Wage and to award wage rates would contribute to a significant overall increase in living standards for award-reliant employees and their families. When added to the 0.5% Superannuation Guarantee (SG) increase that is operative from 1 July and the equivalent of a 1.6% increase in pre-tax income that an employee on the National Minimum Wage will receive in coming months as a result of the personal income tax changes introduced in the 2020-21 Budget, our proposal would result in the equivalent of a 3.2% increase in remuneration for low paid employees.

"In this year's Review the FWC has an opportunity to contribute to the heightened national ambition of reducing unemployment to less than 5 per cent. Awarding a modest increase in the National Minimum Wage and award wages would encourage employers to put on more staff and to increase the hours of work for existing staff.

"Consistent with longstanding past practice, it is appropriate that the FWC take into account the increase to the SG and the decrease in personal taxation, when determining the quantum of any minimum wage increase in the Annual Wage Review.

"Our proposed increase of 1.1% is equivalent to the latest headline annual inflation figure of 1.1% (Q1 2021).

"With regard to the timing of any minimum wage increase, Ai Group has proposed:

• An operative date of 1 July 2021 for any increase in the National Minimum Wage and any increase in Group 1 awards, i.e. 12 months after the last increase.
• An operative date of 1 September 2021 for any wage increase in Group 2 awards. Last year, the minimum wage increase for these awards was delayed by four months. This year, we propose a delay of two months. This would facilitate a smooth transition to a 1 July operative date for any minimum wage increase next year, if there are no ongoing 'exceptional circumstances'.
• An operative date of 1 January 2022 for any wage increase in Group 3 awards. The industries covered by these awards continue to be adversely affected by the pandemic and only paid the last annual wage review increase on 1 February 2021," Mr Willox said.

The Fair Work Act requires that the FWC hand down its decision on any minimum wage increase by 30 June.


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