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Economic uncertainty associated with the end of JobKeeper requires a very cautious approach in this year's Annual Wage Review

"The Australian Industry Group's submission in the Annual Wage Review will argue that the Fair Work Commission (FWC) needs to take a particularly cautious approach in this year's Annual Wage Review given the economic and business risks associated with the end of JobKeeper on 28 March," Innes Willox, Chief Executive of the national employer association Ai Group said today.

"In evidence given to Senate Estimates this week, Treasury Secretary Dr Steven Kennedy advised that Treasury expects the end of JobKeeper to directly cause some businesses to close and 100,000 to 150,000 jobs to be lost:

"Growth will moderate as Australia moves past the initial phase of the recovery from COVID-19 … Determining the overall level of potential job losses is difficult … We believe that in the order of 100,000 to 150,000 JobKeeper recipients may lose employment at the completion of the program, though there is a wide band of uncertainty around this estimate.”

"Ai Group is pleased that the Expert Panel has called for five rounds of submissions, between late-March and early-June, in this year's Review. This timetable will enable Ai Group to assess the latest economic data before settling on a proposed quantum for any minimum wage increase. Ai Group will advise the FWC of its position on any minimum wage increase at a later stage in the Review.

"The quantum and timing of any minimum wage increase would need to take account of:

  • The uncertain outlook for employment, economic growth and business insolvencies;
  • The fact that some sectors have been extremely hard-hit by the pandemic and have not yet recovered to anything like pre-pandemic levels;
  • The minimum wage increase from last year's Annual Wage Review has only just been paid (on 1 February 2021) by employers in some sectors and it would be extremely unfair to require them to pay another increase on 1 July;
  • Headline annual CPI is currently below 1% (i.e. 0.9%);
  • The significant increases in disposable incomes of low paid employees due to the changes to taxation arrangements made in last October's Budget; and
  • Unless legislation is introduced into, and passed by, Parliament before 1 July, employers will be required to pay a 0.5% superannuation guarantee increase from 1 July which will deliver an important benefit to employees.

"It is also important for the FWC to take into account that Australia already has the highest national minimum wage in the world (on a purchasing power parity basis)," Mr Willox said.

Media enquiries: Tony Melville – 0419 190 347