The Fair Work Act requires the Commission to each year conduct a review to set the national minimum wage and adjust pay rates in modern awards.
The Annual Wage Review 2015–16 decision (2015–16 decision) directly affected more than 1.86 million employees in Australia who rely on minimum rates of pay (about 18.8 per cent of employees).
Annual wage reviews are conducted by a seven-member Expert Panel for annual wage reviews (the Panel) comprising of:
The Fair Work Act's minimum wages objective and modern awards objective require the Panel to take into account specific economic, social and collective bargaining considerations in setting the national minimum wage and reviewing modern award minimum wages.
The Panel issued the 2015–16 decision on 31 May 2016.
The decision:
The Panel's determinations varying modern award pay rates and its national minimum wage order came into operation on 1 July 2016 and took effect from the first full pay period on or after that date.
In its 2015–16 decision, the Panel held that:
The general economic climate is robust, with some continued improvement in productivity and historically low levels of inflation and wages growth. The prevailing economic circumstances provide an opportunity to improve the relative living standards of the low paid and to enable them to better meet their needs. The level of increase we have decided upon will not lead to inflationary pressure and is highly unlikely to have any measurable negative impact on employment. It will, however, mean a modest improvement in the real wages for those employees who are reliant on the NMW and modern award minimum wages.1
The Panel noted that, despite some recent improvement in the relative living standards of national minimum wage and award-reliant employees, the relative position of low-paid workers had deteriorated over the past decade and many lived in households with low or very low disposable incomes.
Further, the Panel noted:
Women continue to be over-represented among the award reliant and low paid. Increases in the NMW (national minimum wage) and modern award wages can provide some assistance in addressing the gender pay gap.2
Any organisation or person may make written submissions for the Panel to consider in the annual wage review. This year, the Panel received submissions from 28 parties, including:
As part of the consultation process, the Panel:
The Commission published a study on an international comparison of minimum wages and labour market outcomes by the National Institute of Labour Studies, Flinders University. It commissioned the comparison as part of its medium-term research program, outlined in September 2014. The Commission also published a statistical report and research reference list of data and literature relevant to the minimum wages and modern awards objectives.
Two research reports commissioned by the Commission's Pay Equity Unit also informed the 2015–16 decision. The reports examined:
The Commission has previously considered research on the employment effects of minimum wages, however this was unable to be progressed due to limitations in data and methodology.
The Commission has consistently delivered annual wage review decisions in time to meet the 1 July operative date required by the Fair Work Act and its agency KPI. It has done this by:
The 2015–16 decision and consultations were live streamed on the Commission's website. This allowed a wider range of stakeholders to engage with the process, including interested people from remote regions of Australia and overseas. The website registered 615 total views of the live stream of the consultations. There were 862 total views of the live stream of the decision announcement.
Although noting that it will be for the Panel constituted for the 2016–17 Review to consider, the Panel in its 2015–16 decision:
With its medium-term research program nearing completion, the Panel invited interested parties to lodge future research proposals by 31 July 2016. In doing so, it noted that budgetary constraints were likely to limit its short to medium term capacity for additional commissioned or internal research. The two projects remaining from the medium research program are an analysis of the youth labour market, and the extent and characteristics of underemployment and its relationship with unemployment.