Australian Fair Pay Commission

Last updated November 15, 2024

The Australian Fair Pay Commission was an Australian statutory body that existed from 2006 to 2009. It was created under the Howard government's "WorkChoices" industrial relations laws in 2006 to set the minimum pay for workers. Established to replace the wage-setting functions of the Australian Industrial Relations Commission, the Commission set and adjusted a single adult minimum wage, non-adult minimum wages (such as training wage), minimum wages for award classification levels, and casual loadings.^[1] The Commission was abolished in December 2009 with the wage-setting function passing to the minimum wage panel of the Fair Work Commission.

The profile of the members of the Commission was different from that of the Australian Industrial Relations Commission which previously had responsibility for determining the above matters. There was less representation of trade unions, and less transparency in decision-making, making it possible for the Commission to make judgements with no community oversight or consultation. Unlike the Australian Industrial Relations Commission, the Commission funded substantial research on the economic effects of raising the minimum wage, and proponents claimed that this placed more of an emphasis on determining whether the economic evidence suggested that raising the minimum wage made the poor better off.

Critics argued that the board lacked independence and scope and that it reduced the benefits of workers, while supporters believed it helped to stimulate the economy and improve working conditions.

2006 decision

On 26 October 2006, the Commission handed down its first decision.^[2] The Commission's media release stated:

The Australian Fair Pay Commission today announced an increase of $27.36 per week in the standard Federal Minimum Wage and in all Pay Scales up to $700 per week. This covers just over one million Australian workers who rely on the Commission’s decisions for adjustments in their wages.
The Commission also awarded an increase of $22.04 per week to all Pay Scales paying $700 per week and above, or more than $36,000 per year, representing another 220,000 workers, about 2% of the workforce.

In hourly terms, the Australian federal minimum wage increased to $13.47 per hour (for workers on pay scales of less than $700 per week), with effect from 1 December 2006.

Many commentators were surprised the Commission's first decision was so generous. For example, the Australian Council of Trade Unions had asked for a minimum wage increase of $30 per week. Despite this, the rise barely kept up with inflation since the previous pay rise handed down by the Australian Industrial Relations Commission in June 2005.

2007 decision

On 5 July 2007, the Commission handed down its second wage decision. The decision increased minimum wages from $13.47 to $13.74 per hour, or $10.26 a week for wages below $700, and by $5.30 for wages above $700. The rise took effect from the first pay period commencing on or after 1 October 2007. This was a change of policy from the Commission's first decision, which took effect on the 1 December 2007 and was criticised by employer groups for causing difficulties for businesses, which had to implement a pay rise within a pay period. Traditionally, the Australian Industrial Relations Commission implemented wage and allowance rises from the first 'pay period commencing' from a set date.

The Commission took into account the time period between the inaugural and second wage decisions, and other factors including tax cuts announced in the budget that took effect from 1 July 2007. The Commission, whilst considering these matters, did not discount the wage increase on account of tax cuts.

Another historic feature of the decision was that for the first time, farmers were granted a deferral from the wage increase on account of severe drought. Incapacity to pay had been argued numerous times over the last twenty five years, but mostly unsuccessfully, before the Australian Industrial Relations Commission. The Commission's decision granting the deferral was therefore a landmark in the history of industrial relations for the National Farmers' Federation.

Trade union reaction

Trade unions viewed the Commission as a conservative business-friendly organisation that threatened the basic rights, pay and entitlements of workers. Further, they argued that the Commission benefited business at the expense of workers. Unions viewed the Australian Industrial Relations Commission as independent and wished to retain it as the minimum wage setting body. The ACTU's Greg Combet expressed his concern about Professor Harper's ability in an interview with Radio National's Mark Colvin.^[3]

Related Research Articles

A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Because minimum wages increase the cost of labor, companies often try to avoid minimum wage laws by using gig workers, by moving labor to locations with lower or nonexistent minimum wages, or by automating job functions. Minimum wage policies can vary significantly between countries or even within a country, with different regions, sectors, or age groups having their own minimum wage rates. These variations are often influenced by factors such as the cost of living, regional economic conditions, and industry-specific factors.

The Australian Council of Trade Unions (ACTU), originally the Australasian Council of Trade Unions, is the largest peak body representing workers in Australia. It is a national trade union centre of 46 affiliated unions and eight trades and labour councils. The ACTU is a member of the International Trade Union Confederation.

A living wage is defined as the minimum income necessary for a worker to meet their basic needs. This is not the same as a subsistence wage, which refers to a biological minimum, or a solidarity wage, which refers to a minimum wage tracking labor productivity. Needs are defined to include food, housing, and other essential needs such as clothing. The goal of a living wage is to allow a worker to afford a basic but decent standard of living through employment without government subsidies. Due to the flexible nature of the term "needs", there is not one universally accepted measure of what a living wage is and as such it varies by location and household type. A related concept is that of a family wage – one sufficient to not only support oneself, but also to raise a family.

Australian labour law sets the rights of working people, the role of trade unions, and democracy at work, and the duties of employers, across the Commonwealth and in states. Under the Fair Work Act 2009, the Fair Work Commission creates a national minimum wage and oversees National Employment Standards for fair hours, holidays, parental leave and job security. The FWC also creates modern awards that apply to most sectors of work, numbering 150 in 2024, with minimum pay scales, and better rights for overtime, holidays, paid leave, and superannuation for a pension in retirement. Beyond this floor of rights, trade unions and employers often create enterprise bargaining agreements for better wages and conditions in their workplaces. In 2024, collective agreements covered 15% of employees, while 22% of employees were classified as "casual", meaning that they lose many protections other workers have. Australia's laws on the right to take collective action are among the most restrictive in the developed world, and Australia does not have a general law protecting workers' rights to vote and elect worker directors on corporation boards as do most other wealthy OECD countries.

The Shop, Distributive and Allied Employees' Association (SDA) is the largest private sector trade union in Australia, representing retail, fast-food and warehousing workers, and has branches in every state and territory. Its membership is predominantly in casual and insecure employment within the retail and fast food sectors. The union also represents a significant membership of workers from culturally and linguistically diverse backgrounds.

The Australian labour movement began in the early 19th century and since the late 19th century has included industrial and political wings. Trade unions in Australia may be organised on the basis of craft unionism, general unionism, or industrial unionism. Almost all unions in Australia are affiliated with the Australian Council of Trade Unions (ACTU), many of which have undergone a significant process of amalgamations, especially in the late 1980s and early 1990s. The leadership and membership of unions hold and have at other times held a wide range of political views, including socialist, democratic and right-wing views.

The National Minimum Wage Act 1998 creates a minimum wage across the United Kingdom. From 1 April 2024, the minimum wage is £11.44 for people aged 21 and over, £8.60 for 18- to 20-year-olds, and £6.40 for 16- to 17-year-olds and apprentices.

An Australian workplace agreement (AWA) was a type of formalised individual agreement negotiated between an employer and employee in Australia that existed from 1996 to 2009. Employers could offer a "take it or leave it" AWA as a condition of employment. They were registered by the Employment Advocate and did not require a dispute resolution procedure. These agreements operated only at the federal level. AWAs were individual written agreements concerning terms and conditions of employment between an employer and employee in Australia, under the Workplace Relations Act 1996. An AWA could override employment conditions in state or territory laws except those relating to occupational health and safety, workers' compensation, or training arrangements. An AWA was required to meet only the most minimal Australian Fair Pay and Conditions Standard. Agreements were not required to include effective dispute resolution procedures, and could not include prohibited content. Agreements were for a maximum of five years; approved, promoted and registered by the Workplace Authority; operated to the exclusion of any award; and prohibited industrial action regarding details in the agreement for the life of the agreement. The introduction of AWAs was a very controversial industrial relations issue in Australia.

WorkChoices was the name given to changes made to the federal industrial relations laws in Australia by the Howard government in 2005, being amendments to the Workplace Relations Act 1996 by the Workplace Relations Amendment Act 2005, sometimes referred to as the Workplace Relations Amendment Act 2005, that came into effect on 27 March 2006.

Ex parte H.V. McKay, commonly referred to as the Harvester case, is a landmark Australian labour law decision of the Commonwealth Court of Conciliation and Arbitration. The case arose under the Excise Tariff Act 1906 which imposed an excise duty on goods manufactured in Australia, £6 in the case of a stripper harvester, however if a manufacturer paid "fair and reasonable" wages to its employees, it was excused from paying the excise duty. The Court therefore had to consider what was a "fair and reasonable" wage for the purpose of the act.

The Australian Fair Pay and Conditions Standard was a set of five minimum statutory entitlements for wages and conditions introduced as part of the Howard government's WorkChoices amendments to Australian labour law in 2006 and then abolished by the Fair Work Act 2009 in 2010.

The Prices and Incomes Accord was a series of agreements between the Australian Labor Party (ALP) and the Australian Council of Trade Unions (ACTU), in effect from 1983 to 1996. Central to these agreements was an incomes policy to address the stagflation crisis by restraining wages. The unions agreed to restrict their wage demands, and in exchange, the government provided a 'social wage' of welfare and tax cuts.

Minimum wage law is the body of law which prohibits employers from hiring employees or workers for less than a given hourly, daily or monthly minimum wage. More than 90% of all countries have some kind of minimum wage legislation.

In the United States, the minimum wage is set by U.S. labor law and a range of state and local laws. The first federal minimum wage was instituted in the National Industrial Recovery Act of 1933, signed into law by President Franklin D. Roosevelt, but later found to be unconstitutional. In 1938, the Fair Labor Standards Act established it at 25¢ an hour. Its purchasing power peaked in 1968, at $1.60. In 2009, Congress increased it to $7.25 per hour with the Fair Minimum Wage Act of 2007.

The history of minimum wage is about the attempts and measures governments have made to introduce a standard amount of periodic pay below which employers could not compensate their workers.

The New York State Department of Labor is the department of the New York state government that enforces labor law and administers unemployment benefits.

The Fair Labor Standards Act of 1938 29 U.S.C. § 203 (FLSA) is a United States labor law that creates the right to a minimum wage, and "time-and-a-half" overtime pay when people work over forty hours a week. It also prohibits employment of minors in "oppressive child labor". It applies to employees engaged in interstate commerce or employed by an enterprise engaged in commerce or in the production of goods for commerce, unless the employer can claim an exemption from coverage. The Act was enacted by the 75th Congress and signed into law by President Franklin D. Roosevelt in 1938.

Gender pay gap in Australia looks at the persistence of a gender pay gap in Australia. In Australia, the principle of "equal pay for equal work" was introduced in 1969. Anti-discrimination on the basis of sex was legislated in 1984.

The Department of Labour was an Australian government department that existed between December 1972 and June 1974. This department was created and operated under the Whitlam government, with Clyde Cameron appointed as minister. The Department of Labour was a catalyst for the increase in the national minimum wage and pushed for the equalising of pay rates between men and women. During this period, Cameron pushed for paid maternity and annual leave. They also worked to reduce the number of industrial disputes for the Conciliation and Arbitration Commission. Many attribute the department's employment of wage indexation policies as a contributing factor to the 1975 economic recession.

The Retail and Fast Food Workers Union (RAFFWU) is an Australian trade union for workers in the retail and fast food industries.

References

↑ "Welcome to the Australian Fair Pay Commission". Australian Fair Pay Commission. Archived from the original on 17 May 2006. Retrieved 11 May 2006.
↑ "fairpay.gov.au - Minimum wage decision October 2006". www.fairpay.gov.au. Archived from the original on 10 January 2007.
↑ "PM with Samantha Donovan". ABC listen. 14 November 2024. Retrieved 14 November 2024.

This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.

[1] "Welcome to the Australian Fair Pay Commission". Australian Fair Pay Commission. Archived from the original on 17 May 2006. Retrieved 11 May 2006.

[2] "fairpay.gov.au - Minimum wage decision October 2006". www.fairpay.gov.au. Archived from the original on 10 January 2007.

[3] "PM with Samantha Donovan". ABC listen. 14 November 2024. Retrieved 14 November 2024.

[1]

[2]

[3]