As interest rates rise, petrol prices continue to soar and consumer costs esca­late in the wake of Australia’s worst drought on record, the minimum wage increase announced on 26 October could not have come at a better time. Taking effect from 1 December 2006, the wage increase of $27.36 per week on all pay scales up to $700 per week will benefit Australia’s lowest paid workers.

Under the Workplace Relations Amendment (WorkChoices) Act 2005, the Australian Fair Pay Commission (Commission) was estab­lished to replace the Australian Industrial Relations Commission as the independent wage-setting body responsible for conducting wage reviews in the federal workplace relations system. The first decision of the Commission involved an extensive consultation process both with key stakeholders and a broad range of representative organisations with an interest in minimum wages in Australia.

The role of the Commission is to determine and adjust the Federal Minimum Wage (FMW) and minimum classification rates of pay, as well as special FMWs for juniors, trainees and employees with disabilities, minimum wages for piece workers, and casual loadings.

In setting the minimum wage, the Commission must consider:

• The capacity for the unemployed and low paid to obtain and remain in employment;
• Employment and competitiveness across the economy;
• Provision of a safety net for the low paid; and
• Provision of minimum wages for junior employees, trainees and employees with a disability to ensure they remain competitive in the labour market.

The minimum wage increase, the first since June 2005, applies to employees receiving minimum wage rates including:

• those receiving the standard FMW Wage; or
• those receiving a rate of pay included in Australian Pay and Classification Scales.

Those not covered under the increase are employees covered by the five year transitional federal award system, those covered by Australian Workplace Agreements (AWAs) or agreements approved prior to the commence­ment of WorkChoices and those covered by preserved state agreements.

While this first wage decision from the Commission appears to have taken both supporters and critics of the new pay-setting body by surprise, the next general wage-setting decision, due mid 2007, will be watched with interest. This, together with the commencement of a wage review in early 2007 focusing on minimum wages for junior employees and those trainees , will determine whether this decision really is the ‘final nail in the scare campaign’ against WorkChoices, as described by Workplace Relations Minister Kevin Andrews. Either way, the resolve of the federal government has been strengthened with the recent High Court decision dismissing challenges to the con­stitutional validity of the WorkChoices legislation. The decision opens the way for the Commonwealth to regulate more aspects of business activity previously left to the states.

More information

 >From the LIV Bookshop
Work Choices: A Guide to the 2005 Changes , by Riley & Peterson, $150

Useful web links

Visit the Australian Fair Pay Commission at www.fairpay.gov.au and the Office of the Employment Advocate www.oea.gov.au , which includes tips on negotiating workplace agreements.