Setting the minimum wage

Each year the Commission conducts a review to set the national minimum wage and adjust pay rates in modern awards.

More than 1.86 million employees who are award-reliant (around 18.8 per cent of the workforce) were directly affected by the Annual Wage Review 2014–15.

The annual wage review is conducted by an Expert Panel comprised of seven members including:

  • the President of the Commission
  • three other full-time Members of the Commission
  • three part-time Expert Panel Members with knowledge or experience relevant to minimum wage setting.

The Expert Panel must take into account the matters contained in the minimum wages objective and the modern awards objective, which are grouped as economic, social and collective bargaining considerations.

The Annual Wage Review 2014–15 Decision was issued on 2 June 2015. The decision:

  • increased all modern award pay rates and most transitional instrument wages by 2.5 per cent
  • set the national minimum wage for award and agreement-free employees at $656.90 per week, calculated on the basis of a week of 38 ordinary hours, or $17.29 per hour
  • set a number of special national minimum wages for award and agreement-free employees with disability and for award and agreement-free junior employees, trainees and apprentices.

Determinations varying modern award pay rates and the national minimum wage order came into operation on 1 July 2015 and took effect from the first full pay period on or after that date.

Submissions considered in the Annual Wage Review 2014–15

Any person or organisation may make written submissions to the Expert Panel for consideration in the annual wage review. This year, the Expert Panel received submissions from:

  • the Australian Government
  • state governments
  • the federal opposition
  • peak employer and employee representative bodies, and
  • social interest and community-based organisations.

The Expert Panel considered submissions from these parties through a series of consultative processes conducted during the annual wage review including:

  • receiving 26 initial submissions (March and April 2015)
  • receiving six submissions in reply (April 2015)
  • receiving six post-Budget submissions (May 2015)
  • requesting parties to respond to questions on notice (May 2015)
  • receiving seven responses to questions on notice and two other sets of consultation materials (May 2015)
  • holding consultations for interested persons and organisations to make oral submissions to the Expert Panel (May 2015).

Medium-term research program

On 30 September 2014, the Expert Panel outlined its medium-term research program to inform the Annual Wage Review 2014–15 and future annual wage reviews.

The broad purpose of the medium-term research program is to inform the annual wage review with relevant qualitative and quantitative analysis and data. The research assists the Expert Panel in balancing the legislative objectives in light of the changed economic and social data from year to year.

In developing and undertaking the research program, the Commission consulted with its Minimum Wage Research Group comprising a chair from the Commission's Workplace and Economic Research Section and representatives nominated by the Australian Government, state and territory governments, and peak employer, employee and social interest representative bodies.

As part of this program, the following research was published for the Annual Wage Review 2014–15 and is available on the Commission's website:

  • a report on award reliance and business size using data from the AWRS
  • statistical reporting, including data from the AWRS regarding the cost of work for minimum wage earners
  • a research reference list of working papers, journal articles and other types of published reports relevant to the minimum wages and modern awards objectives
  • upon request, data from the Award Reliance Survey that has been modified consistent with privacy provisions.

Future research priorities outlined in the medium-term research program include:

  • an analysis of the youth labour market, the underemployed and unemployed, and employees by gender and industrial arrangements
  • an international comparison of minimum wages and labour market outcomes
  • research on the work decisions and pay equity of low-paid women.

Achieving success

The Commission has consistently delivered decisions in time to meet the 1 July operative date required by the Fair Work Act and its agency KPI.

Factors contributing to this success include:

  • immediately after the conclusion of the annual wage review, evaluating the processes for the completion of the previous review and planning for the next review
  • consulting widely with stakeholders to ensure their views are taken into account by the Expert Panel
  • managing workflow and resources by Members and Commission staff to meet statutory timeframes.

Innovation

This year's annual wage review decision and consultations were live streamed on the Commission's website. The live streaming of the decision and consultations allowed a wider range of stakeholders to engage with the annual wage review, including interested people from remote regions of Australia and abroad. The website registered 472 total views and 270 unique views of the live stream of the consultations. For the announcement of the decision, there were 1354 total views and 807 unique views of the live stream.

Further information can be found in the Future Directions section of this report.