Saturday, January 31, 2015

Less People May Be On Australia’s National Minimum Wage Than You Think

This week the Fair Work Commission released its first findings from its Australian Workplace Relations Survey (AWRS), which is a survey that links together employers and their employees in the same data set. Most of the first findings are pretty basic, and generally covered by the Australian Bureau of Statistics’ set of surveys. Like the Household Income and Labour Dynamics in Australia survey the really interesting stuff should come when researchers start to do their ‘cross-tabs’ and interrogate the data a bit more.

One nugget of interest for me though in the first findings was the extent of use of Australia’s National Minimum Wage – which is currently $16.87 an hour. The survey found that only about 1 per cent of enterprises pay any of their employees the National Minimum Wage, and only 0.2 per cent of employees are paid the National Minimum Wage.

Those numbers do not really surprise me, although it is interesting to have them confirmed. But this does not necessarily mean that barely anyone is reliant on the National Minimum Wage adjustments. The National Minimum Wage applies to employees not covered by an award or agreement, and plenty of employees on award rates may be getting paid the same rate as the National Minimum Wage, or close to it. Indeed, the low extent of employees being paid the National Minimum Wage indicates that most employees are covered by an award or agreement. Other surveys have found – as shown in the Productivity Commission’s recent Issues Paper for its Workplace Relations Framework inquiry – that the percentage of employees paid the hourly minimum wage rate is more like 5 to 10 per cent, whether this be through an award or otherwise.

I suppose another thing of interest for me from the AWRS’ first findings was that employers still prefer to use informal documents to grant an employee flexible working arrangements rather than the formal Individual Flexibility Arrangements. (I wonder what employees prefer?) IFAs have in general not been that widely used since they were first introduced. It would not surprise me if the Productivity Commission’s inquiry recommends dropping or replacing IFAs from the industrial relations system. Speaking of the PC’s inquiry, with the Issues Paper now released, I may post something about that sometime in the next few weeks.   

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