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Fair Work Commission takes ‘nuanced approach’ with wage increase

Adrian Flores
Adrian Flores
19 June 2020 2 minute readShare
wage increase

The Fair Work Commission has decided to push ahead with an increase in the national minimum wage. However, it said the disproportionate impact of COVID-19 across different industries meant a more “nuanced approach” was needed.

In making its decision, the commission said that the outlook of the Australian economy remains very uncertain, with the shock to the labour market weighing favourably in preserving employment.

It said the prevailing economic circumstances and pathway to recovery warrant a cautious approach both in terms of the quantum and timing of the increase.

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However, the commission determined that a 1.75 per cent increase was justified and necessary despite very difficult macroeconomic circumstances, meaning the national minimum wage will increase to $753.80 per week, or $19.84 per hour.

Start date of increase varies by industry

 

The commission considered exceptional circumstances which justify a delay in the start of the increase, saying the COVID-19 impact has been inconsistent and not all industries have been impacted evenly.

 

 

 

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As a result, it said a more “nuanced approach” was required to the timing of the increase, and determined to implement the increase in the stages outlined below:

Group

Start date


Industry sectors
 

Group 1

1 July 2020

  • Frontline healthcare and social assistance workers
  • Teachers and childcare workers
  • Other essential services

Group 2

1 November 2020

  • Construction
  • Manufacturing
  • A range of other industries

Group 3

1 February 2021

  • Accommodation and food services
  • Arts and recreation services
  • Aviation
  • Retail trade
  • Tourism

Australian Retailers Association chief executive Paul Zahra said deferring any increase in minimum wages until February for challenged sectors such as retail will help preserve retail jobs and accelerate business recovery. 

“We are pleased that the commission has acknowledged the retail sector among the most highly affected by the pandemic and taken this into account by deferring the impact of a wage increase until after the critical Christmas trading period,” Mr Zahra said.

“The position taken by the commission is balanced and delivers an outcome that is fair for those seeking employment, employees and small businesses.

“The decision today has rightly prioritised the need to support retail businesses in order to help them keep as many employees as possible and encourage them to employ new staff.”

Franchise Council of Australia chief executive Mary Aldred said it was encouraging that it considered sectors heavily impacted by COVID-19, including tourism, retail trade and food services, in determining a longer implementation date.  

“Retail and food services are fighting for their business survival right now, which the commission has acknowledged. It is vitally important that businesses in these sectors are given their best shot at making it through the next critical period, and that employers are not deterred from putting on jobseekers through excessive wage increases,” Ms Aldred said.

“The implementation date next month will be an additional burden for businesses struggling to keep their head above water right now. 

“For the hardest hit sectors, the deferral of the implementation date will help cushion the impact, keeping in mind that JobKeeper is due to finish in under 100 days and there has been a slow return to trade following the gradual lifting of government restrictions.”

Fair Work Commission takes ‘nuanced approach’ with wage increase
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Adrian Flores
Adrian Flores

Adrian Flores is the deputy editor of MyBusiness. Before that, he was the deputy editor for SMSF Adviser as well as features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at [email protected].

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