COVID-19: ANNUAL WAGE REVIEW – GOVT INDICATIONS
Our team at HR Unplugged have turned our thoughts to the Annual Wage Review in recent weeks, on the back of the COVID-19 pandemic and the Government’s strong stimulus responses in protecting jobs, wages, businesses both small and large, and the overall economy.
The Annual Wage Review directly impacts 21% of Australian employees as it dictates the National Minimum Wage and base Award pay rates.
The Fair Work Commission invites submissions from a large number of stakeholders up to the end of March each year as well as reviewing trends, unemployment and economic data, in order to make an announcement on the annual wage increase in early June, effective the first full pay period in July.
You can read our previous news on last year’s 3% Annual Wage increase, here.
It has been clear to us from indications from the Federal Government and swift variations to current Awards, that this year, the Annual Wage Review was always going to be different – welcome news for employers who are trying to stay afloat, without sustaining an increase in payroll.
The Commission has already varied the timetable for submissions, and the Federal Government have now tabled their submission on the 3rd April on the back of the COVID-19 crisis, as well as the drought and bushfire effects.
Key points – Federal Government submission
The current pandemic situation, the drought and the bushfires will impact on the Expert Panel’s ability to assess the performance of the economy and related trends.
Outlines their expectation of economic uncertainty with wide-reaching business impacts.
Urges the Expert Panel to consider wide-ranging impacts of their decision to lift the Minimum Wage and Award rates, whilst acknowledging the need for a safety net for our vulnerable employees.
Refers to research stating the most vulnerable, in an economic downturn, will be at the most risk from unemployment if minimum wage increases are more pronounced.
Industries with high Award reliance (and hence pay rates determined by the Commission), are the very businesses that are most impacted from the pandemic, drought and bushfires. These are Accommodation and Food Services, Health Care and Social Assistance, and Retail - to name but a few.
Small businesses (0-19 employees) are important to the national economy, employing approx. 4.9 million people, making up 34% of Award-reliant employees. On the back of the Government’s targeted $320 billion stimulus packages, the government’s submission states these small employers will be disproportionately affected by the pandemic.
The pandemic will negatively impact the labour market. Prior to this pandemic, we reached a record high of 13,015,100 participants in February 2020. Regardless, Australia still had a higher than target youth unemployment and long-term unemployed rates.
This submission, while carefully crafted by the Australian Government, is strongly worded to clearly set out their position that in these uncertain times, of uncertain length, even greater deliberation and care will need to be taken in considering a Minimum Wage increase and impacts on Award rates.
It is never an easy, or often popular, decision at the best of times, but in the year of 2020, we hope the Expert Panel of the Annual Wage Review, take these strong messages on board to ensure a stronger future for our business owners.
Please reach out to us to discuss your situation, and the different scenarios you may be facing. Some sound, practical advice from us, can save you a lot of heartache (and money) in the future.
Visit our website to access our specific COVID-19 Business Assistance Package here.
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Data source: Australian Government Submission to the Fair Work Commission Annual Wage Review 2020, 3 April 2020