2008 WAIRC 00347
2008 STATE WAGE ORDER PURSUANT TO SECTION 50A OF THE ACT
WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES ON THE COMMISSION'S OWN MOTION

CORAM CHIEF COMMISSIONER A R BEECH
SENIOR COMMISSIONER J H SMITH
COMMISSIONER P E SCOTT
COMMISSIONER S WOOD
COMMISSIONER J L HARRISON
HEARD MONDAY, 19 MAY 2008
DELIVERED MONDAY, 9 JUNE 2008
FILE NO. APPL 115 OF 2007
CITATION NO. 2008 WAIRC 00347

CatchWords State Wage order – Commission's own motion – Minimum wage for employees under Minimum Conditions of Employment Act 1993 – Award rates of wage – Award minimum wage – Arbitrated Safety Net Adjustment – State wage principles – coverage of jurisdiction – Industrial Relations Act 1979 s.50A.
Result General Order issued
2008 WAIRC 00347

Representation Ms K Scoble and with her Ms M Groenewold, for the Hon Minister for Employment Protection
Ms J Freeman, for Trades and Labor Council of Western Australia
Mr G Bull, for Australian Mines and Metals Association (Inc)
Mr D Jones, for Chamber of Commerce and Industry of WA


Reasons for Decision

1 This is the unanimous decision of the Commission in Court Session. The Commission is required by s.50A of the Industrial Relations Act 1979 (the Act) before July in each year to make a General Order setting the minimum wage applicable under s.12 of the Minimum Conditions of Employment Act 1993 (MCE Act) to employees who have reached 21 years of age, and to apprentices and trainees. The Commission is also to adjust rates of wages paid under State awards.

2 The Commission placed public advertisements calling for public submissions in the local newspaper on Saturday, the 8th and on Wednesday, the 12th days of March, 2008. The information was also published on the Commission's website and in the WA Industrial Gazette.

3 Submissions were received from the Trades and Labor Council of Western Australia (TLCWA), the Hon Minister for Employment Protection (the Minister), Australian Mines and Metals Association, Inc. (AMMA), Chamber of Commerce and Industry of Western Australia (CCIWA), and Western Australian Council of Social Services (WACOSS). The Commission sat and heard oral submissions on 19 May 2008.

SUMMARY OF POSITIONS
4 The Minister submitted that the Commission should increase the minimum wage by $29.00 per week. The Minister says that this increase to both adult minimum wage and adult award wage rates is balanced and sustainable in the context of the current labour market wages, the State's buoyant economic conditions and the needs of WA employees, including the low paid. It is an approximate 5.5% increase in the State minimum wage rate and is an increase that is moderately above Perth's inflation rate for the year to March 2008.

5 Figures were presented showing that minimum wages have declined relative to average earnings over the past decade. In the ten years to June 2007 the real increase in Average Weekly Ordinary Time Earnings (AWOTE) is 25.5%; over the same period the real increase in the State minimum wage has been less than half, that is 12.5%. The Minister submitted that the Wage Price Index (WPI) confirms that growth in the lower paid sectors is well behind the all-industries growth rate. Perth continues to experience a slightly higher rate of annual inflation than the national average. Increased costs mean a greater proportion of household expenditure will be devoted to essentials leaving the low paid with little or no ability to meet financial emergencies. The Commission was presented with submissions regarding median house prices and stating that low paid workers are more likely to be in private rental accommodation and be particularly vulnerable to increases in rental costs.

6 Workers in low paid sectors of industry are more likely to be either directly or indirectly reliant on minimum wage adjustments with only a limited ability to improve their labour market position through either collective or individual bargaining. Further, it was submitted that award-only employees in WA receive lower average earnings per hour than award-only employees in any other State or Territory in Australia. There is no evidence to suggest that the Commission's previous increases to the State minimum wage and award wage rates have provided a disincentive to enterprise bargaining.

7 The Minister informed the Commission that there was a 37.8% increase in the uptake of apprenticeships and traineeships in WA between 2003 and 2007; previous apprentice minimum wage increases ordered by the Commission have not discouraged the uptake of adult or junior apprenticeships in WA.

8 The Minister also informed the Commission that award-only employees are more likely to be female and often have less bargaining power to negotiate above-award rates of pay. If increases in the minimum wage fail to keep pace with inflation then women as a subset of low paid employees will be disproportionately affected and disadvantaged. Western Australia has the largest gender pay gap of all the States at 27.3%, significantly higher than the national gender pay gap of 15.9%. In unincorporated organisations, female employees outnumber male employees and any real wage increase delivered through increases to the minimum wage will go some way to addressing the gender pay gap.

9 The Minister called Mr Michael Eckermann, Assistant Director of Economic Policy of the WA Department of Treasury and Finance. A primary role of the Department is the compilation of economic analysis and forecasts as well as provision of advice on economic matters for the WA government. Mr Eckermann gave detailed evidence on the state of the WA economy and the impact of increasing the WA minimum wage by $29.00 per week. Mr Eckermann was cross-examined on his evidence. We express our appreciation to the Department for making Mr Eckermann available and for the economic material made available to us. We refer in our decision below to that material.

10 The Minister submitted that given the outlook for strong economic conditions continuing over the next year a $29.00 increase to the minimum wage and award wage rates will have no negative impact on the WA economy. Further, any impact of movement in the WA minimum wage would be almost insignificant on a national level because the State Wage order impacts on an extremely small proportion of employees nationally. The Minister noted that profits of WA industries as a whole increased by 21.3% in 2006/07 and award-reliant industries which will be most significantly impacted by the State Wage order also recorded steady profit growth during this period.

11 TLCWA submitted that the Commission should increase the minimum wage by the equivalent of the movement in the WA WPI of 5.9% to the December quarter 2007. This equates to a flat increase of $31.20. TLCWA says that such an increase is moderate, sustainable and warranted on economic, industrial and equity criteria. TLCWA submitted that the WA economic performance is extremely robust, unemployment is low, labour participation rates are high, jobs growth is significant and infrastructure investment remains substantial. An increase of $31.20 would ensure that employees who lack sufficient bargaining capacity in their workplaces can share in the economic benefits of the economy and the increase will not discourage enterprise bargaining in WA. TLCWA points out that the minimum wage affects a relatively small proportion of the WA workforce, however, this sector is particularly vulnerable and not in a position to negotiate above-award wages; they are low income employees employed on a part time or casual basis in non-managerial occupations, who are predominantly female and are concentrated in low skill positions.

12 TLCWA noted that real wages in WA are growing and the increase sought by the TLCWA will ensure award wage and minimum wage earners do not fall further behind the rest of the workforce. Expenditure of minimum wage and award-wage employees is focussed on necessities such as housing, food, fuel, power, clothing and transport, which are expenditure groups for which costs are increased at rates higher than the Consumer Price Index (CPI) rate. TLCWA submitted that some 31% of low-income households purchasing a home experienced housing stress in 2003/04, the current gender pay gap in WA has increased to 27.3% compared to the national average of 15.9% and the WA economy continues to experience robust economic conditions with a range of indicators showing considerable strength. TLCWA submitted to the Commission a copy of its March 2008 submission to the Australian Fair Pay Commission (AFPC).

13 AMMA submitted that there is a requirement to provide for the needs of the low paid but this must be weighed against allowing juniors, trainees, apprentices and the unemployed to enter the workforce through low paid work. Similar to its position in 2007, AMMA supported a modest flat increase to the minimum wage with a similar increase to adult award wages and a proportionate increase to juniors, trainees and apprentices and maintains that the increase should not exceed the movement in the CPI for Perth nor the State WPI forecast for 2007/08. In AMMA's view, a modest increase combined with the impending July 2008 tax cuts is the best way of minimising inflationary pressures whilst still delivering a real income boost to the lower paid and State Wage Case increases must be able to be absorbed into salaries and wages paid above the minimum rates set.

14 AMMA noted that almost all of its membership would not be affected by the decision in this matter. Nevertheless, AMMA's submission noted that WA is benefitting from an international environment where high commodity prices are favouring WA's export industries and in particular mineral commodity export prices. AMMA submits that the outlook for the WA economy in 2008/09 remains bright, indicating that the WA economy can withstand a modest increase in the minimum wage without fuelling inflationary pressures or impacting on employment growth and factors such as the strengthening dollar, difficulties with equipment supplies and skill shortages tend to moderate the position of the WA resources sector as the key driver of the WA economy. AMMA provided particulars of major construction and upgrade/outage projects from 2008 onwards and AMMA presented the Department of Industry and Resources overview of the latest statistics for the mineral and petroleum industry.

15 CCIWA submitted that the increase in the minimum wage should be $17.00 per week. Its submission stated that a summary of the major economic indicators reveals a healthy economic outlook for WA over the next three years with growth rates of 6%, 6% and 5% over that time period. CCIWA notes that the labour market has tightened, and unemployment rates returned to the lowest levels on record since September 1974 and it predicted that labour shortages are likely to continue to be a feature of the State's economy in the foreseeable future.

16 CCIWA noted that the average weekly wage in WA is now $1,211.70, 9.1% higher than the national average and that WA had the fastest rate of growth in the WPI in the country and it expects inflation will continue to remain strong in the foreseeable future with a growth of 3.25% in 2008/09.

17 CCIWA regarded as of particular importance the Commission's observation in the 2007 State Wage Case ((2007) 87 WAIG 1487 at 1491) that it is obliged to consider the need to do more than merely maintain the value of the minimum wage but that no one matter of the matters set out in s.50A(3) is to be viewed in isolation. CCIWA stated that this approach should be followed by the Commission this year to produce an increase in the minimum wage and award wage rates in the same order as movements in community wage rates over the last year, thereby maintaining the real value of those wage rates.

18 CCIWA referred to the year-average increase in the CPI for Perth of 3.25% and stated that this would produce a minimum wage increase of $17.00 per week. CCIWA did not consider an increase of approximately $30.00 to be sustainable and urged the Commission to be more reserved and produce an increase somewhere between $17.00 and $30.00. CCIWA submitted a copy of the WA Economic Compass Outlook publication for the March 2008 quarter.

19 WACOSS in its written submissions says that the income paid under the minimum wage and accompanying awards is vital to ensure that workers are protected by minimum standards and the wage earned by full time minimum wage workers should be high enough to give them the capacity to meet their basic living costs. Last year's increase of $24.00 to the minimum wage went some way to ensuring the continuing strong economic growth being experienced in WA flowed on to provide strong social outcomes for the State's lowest paid workers, however, it had fallen short of TLCWA's 2007 recommendation to increase award wages by $27.60 per week.

20 The WACOSS submission reiterated the evidence that WACOSS has presented in recent years to demonstrate financial hardship is being experienced by working poor in WA and its updated evidence shows a worsening trend of poverty and social exclusion in WA. WACOSS recommends that increases to the minimum wage should be based at a minimum on the average WPI for WA and in support of its submission WACOSS provided the 2007 publication "The Rising Cost of Living in Western Australia" and its 2008 update. It also supplied the publication "Australia Fair: Update on Those Missing Out".

COVERAGE OF COMMISSION'S JURISDICTION
21 The Commission had requested the Australian Bureau of Statistics (ABS) for a further breakdown of the Employee Earnings and Hours survey from May 2006 (ABS Cat. No. 6306.0) which was referred to in the 2007 State Wage Case ((2007) 87 WAIG 1487 at 1488). The information received from the ABS in reply to this request was distributed to the persons appearing in these proceedings.

22 The information provided by the ABS contains a breakdown of all employees according to the method of setting pay (awards, agreements or unregistered arrangements) and is also jurisdiction based upon type of legal organisation (TOLO). We publish an extract of the table provided to us as it applies to Western Australia. The whole table, and the explanation of the notes within it, is published by us as an appendix to this decision. No person appearing before us sought to address us on the data provided to us.

 
 
Western Australia
%
Relative Standard Error (b)
%
Federal jurisdiction(c)



Federal award or agreement(d)(e)
33.6
3.8

State award or agreement(f)(g)
7.2
14.6

Unregistered arrangement(h)(i)
24.6
6.8

Federal jurisdiction (excluding Working proprietors of incorporated businesses)
65.4
2.1

Working proprietor of incorporated business
3.9
11.7

Total federal jurisdiction
69.3
1.9
State jurisdiction(j)



State award or agreement(f)
7.1
10.0

Unregistered arrangement(h)(i)
6.9
18.4

Total state jurisdiction
13.9
10.4
Unable to be determined(k)
16.8
8.3
Total all jurisdictions
100.0





© Commonwealth of Australia 2008



23 We observe that the data shows that on the types of legal organisations seen by the ABS as being within the State jurisdiction, approximately 14% of Western Australian employees are said to be within the State jurisdiction. A further almost 17% are "unable to be determined" however this category refers to persons whose pay was set by State registered individual or collective agreements or State awards or unregistered individual arrangements and a review of the TOLO codes used by the ABS suggests to us that it is highly likely these employees are similarly in the State system. We consider it open to conclude on this data that approximately 30% of the State's workforce are within the State jurisdiction.

CONSIDERATION
24 We thank all parties for their submissions. We note also the high degree of consistency between all parties appearing before us regarding the criteria we should consider; ultimately, the principal difference between all parties lies only in the amount of the increase to be awarded. All parties appearing before us acknowledged the need to increase the minimum wage and in doing so to have regard, although not necessarily exclusive regard, to the movements of the Perth CPI and WPI indexes and to the state of the WA economy. This follows our 2006 decision where we indicated that, in principle, the real value of the minimum wage should be maintained if the economic State's circumstances permit it.

25 The CPI for Perth for the year to March 2008 is 4.3%. This, together with the WPI in Western Australia of 5.9% shows that there has been a significant and real increase in wages growth for employees generally, the annual increase in AWOTE in WA was 7.3% and average weekly earnings increased by 9.4%. Average weekly earnings in the retail sector in WA are $860.90 per week and in the accommodation sector $826.50 per week. WA's unemployment rate to March 2008 was 3.3%; the youth unemployment rate was 9.8%.

26 This has occurred against the background of the growth in WA's Gross Domestic Product of 6.3% being the highest of all the States and Territories and well above the national average of 3.2% for the same period. WA continues to have a strongly growing economy and continues the trend of the last 6 years of exceeding the national average rate of growth.

27 Figures supplied to us regarding the profits of WA industries as a whole as measured by the Gross Operating Surplus and Gross Mixed Income show an increase of 21.3% in profits in 2006/07. While these figures do not reveal the profitability of individual businesses, they do allow us to conclude that the majority of WA industries experienced an increase in profitability during this period other than cultural and recreational services, personal and other services and the agricultural, forestry and fishing industries. Profitability increases for the accommodation, cafes and restaurants and the retail trade sectors were 12.10% and 23.02% respectively.

28 We conclude that in 2007/08:
(a) the WA economy is forecast to grow by 7.5%;
(b) employment growth is expected to remain strong at 3.75%;
(c) unemployment is expected to remain low at 3%;
(d) annual inflation in Perth is expected to average 3.25%; and
(e) wages are expected to increase by 5.75%.

29 The economic forecasts for WA for the future show that employment will continue to increase, with the rate of growth in employment slowing to 2.5% in 2008/09 and 2.25% in 2009/10. Unemployment is expected to increase slightly over the same period to 3.25%.

30 The WPI for WA is indeed high at 5.9% however it is expected to moderate to increases of 5.25% in 2008/09 and 4.5% in 2009/10. Similarly, the CPI for Perth is expected to moderate to 3.25% and 3% over that same time frame.

31 We conclude that it is quite likely that strong economic conditions will continue in Western Australia for the next 3 years and this therefore creates a favourable environment for an increase in the minimum wage. However, the forecasts presented to us are not without risks. Interest rates have increased from 6.25% in March 2007 to 7.25%, a 12 year high. Major banks have raised interest rates beyond the Reserve Bank's official cash rate increases. This may increase the risk of a drop in consumer spending and confidence, particularly if share prices similarly keep falling. These high interest rates and high prices might affect demand and lead to declining house prices.

32 We share the concerns expressed about the risk inflation poses to the community and to the State and national economies. There is a risk of accelerating inflation if businesses pass on rising labour and input costs and a risk of a decline in business investment if the current financial troubles impede business' capacity to raise capital.

33 However, the uncontested economic evidence before us shows that these risks will not be significantly affected by an increase to the minimum wage or to award wages; the rising labour costs which have occurred have been due to the economic strength of the economy and the relative scarcity of labour driving up the market rates of wages so that they are well in excess of the minimum wage and award rates of wages. Additionally, increases in the minimum wage prescribed in the MCE Act or minimum wages under State awards have a negligible effect on the market rates of wages because the increase to be awarded is able to be absorbed into wage rates paid above those minimum rates.

34 We are satisfied too that an increase to the minimum wage which not only maintains its real value, which is the common position of all persons who appeared or made submissions to us, but gives a modest increase to its real value, which is the position of the Minister, TLCWA and WACOSS and will not on this occasion contribute to inflation. Neither is it likely to have an adverse effect on the level of employment in WA or on productivity. This is because:
(1) 98% of Western Australia's workforce are already receiving a wage above the minimum wage. Our decision will only directly increase the wages being paid to approximately 2% of the State's workforce.
(2) The wage increase from these proceedings for employees on the minimum wage whose wages have not increased since July 2007 merely follows the rest of the workforce who have already received wage increases.
(3) The increase to both the minimum wage and award wage rates will be absorbable into any wage paid above the minimum wage and award wage rates.
(4) There is no evidence, and no-one has suggested, that the increases to the minimum wage and award wage rates awarded by this Commission since the demise of National Wage Cases after the Work Choices amendments to the Workplace Relations Act 1996 (Cth) have had any measurable effect on the level of employment, inflation and productivity in Western Australia.
(5) Rather, the evidence suggests that increases awarded by us to the minimum wage and to award wage rates have followed community wage movements and price increases rather than the reverse. This was the conclusion reached in 2006 by Professor David Plowman, from the Graduate School of Management, University of WA, in a Report on the effects of past statutory minimum wage adjustments in WA (see (2006) 86 WAIG 1631 at 1639), a conclusion with which we respectfully concur.

35 In this regard, the continuing strong economic growth in Western Australia places it in a more favourable position than the economy nationally, and other State economies. We have had regard in this decision to the information placed before us regarding the national economy but we note in particular, and agree with, the comment contained in the information supplied to us by the Minister that the direct aggregate wages impact of a $29.00 increase to the minimum wage proposed by the Minister on inflation and employment at a national level is likely to be quite small and the likelihood of the increase precipitating a wage price spiral is very low.

36 In that context we have also had regard to the level of minimum wages paid elsewhere in this State, and in other States and set out below a table with that information.

LEVEL OF MINIMUM WAGE BY STATE
Western Australia
$528.40
National
$522.12
New South Wales
$531.40
Queensland
$528.40
South Australia
$522.15
Tasmania
$527.10

37 WA's minimum wage is not the highest State minimum wage. It and it is approximately $6.00 higher than the national minimum wage payable under the Workplace Relations Act 1996 (Cth). Any increase awarded by us on this occasion will increase the difference between the WA and national minimum wage, however the difference is likely to be lessened with the next review of the national minimum wage which is expected to be announced in July 2008.

38 As was commented upon during the hearing, the criteria which this Commission is required to take into account in setting a minimum wage for WA are considerably broader than the criteria which the AFPC is required to take into account in its wage-setting function under the Workplace Relations Act 1996 (Cth), particularly the requirement on this Commission in s.50A(3)(a)(i), (iii) and (iv) of the Act to:
· ensure that Western Australians have a system of fair wages and conditions of employment,
· provide fair wage standards in the context of living standards generally prevailing in the community, and
· contribute to improved living standards for employees.

39 Accordingly, it is inevitable that there will be a difference between the WA and national minimum wages. Whether having a difference between the two minimum wages applicable to employees in WA is desirable or not is not a matter for this Commission but a matter for the respective legislatures.

CONCLUSION
40 We have taken the above matters into account in considering the decision we have reached. We are conscious that WA's wages growth has been the highest in the nation. To even maintain the real value of the minimum wage would require an increase of 4.3%, representing the yearly March quarter increase to the CPI for Perth. However we have already noted that over the last 10 years the real value of the WA minimum wage has been less than half of the corresponding increase in real value of average weekly earnings in WA.

41 We are conscious too, of the unchallenged information before us that the majority of employees receiving the minimum wage are female and that an increase in the real value of the minimum wage will assist in redressing the gender pay gap in this State. The information supplied to us by WACOSS in particular has also been helpful to us in reaching this conclusion.

42 We believe the economic circumstances of the State, both at present and as forecasted for the next 3 years, are such that on this occasion we are able to give effect to the need to contribute to improved living standards for employees by providing a real wage increase to the approximately 2% of the State's workforce who actually receive the minimum wage. We consider the $29.00 per week increase proposed by the Minister to be a fair and appropriate increase being an increase which not only adjusts the minimum wage for past inflation but gives a modest real increase of 1.14%. The increase is not greater than the increase of 5.9% in wages generally in WA over the last 12 months as measured by the WPI and is below the forecast future increase in wages in WA of 5.75% for 2007/08. We consider this increase to be sustainable on this occasion because of the State's present and forecast economic performance. However, as the rate of growth in the State's economy begins to slow there may be limited opportunity in the future to not only maintain the real value of the minimum wage but also to provide a real wage increase. The increase will operate on and from the first pay period on or after 1 July 2008.

43 No person appearing submitted that we should adjust rates of wages paid under awards by a different amount than the increase to the minimum wage. On the evidence before us we will adjust award wages by $29.00 per week. The full increase will apply only to employees who are paid the award wage; any wage paid over the award wage is able to be used to offset the increase. We acknowledge the submissions made to us regarding the compressing effect upon relativities of successive flat-dollar increases to award wage rates. No person appearing sought to argue on this occasion that the increase to awards should be a percentage increase and a full examination of the issue will await a future occasion.

THE MINIMUM WEEKLY RATE OF PAY APPLICABLE TO APPRENTICES AND TRAINEES
44 Section 50A(3)(a)(vi) requires the Commission to take into consideration the need to encourage ongoing skills development. No submissions were put to us on this occasion to warrant a departure from the manner by which the Commission has previously set minimum wages applicable to adult apprentices, and to apprentices and trainees generally. We propose to apply the increase to adult apprentices, other apprentices and to trainees in accordance with the usual practice of the Commission.

THE STATE WAGE PRINCIPLES
45 In the 2007 State Wage Decision the Commission gave notice (op. cit. at 1493) that when making the 2008 State Wage order the Commission would review whether the State Wage Principles should be retained in their current form. This was said against the background of the significant changes made to the Workplace Relations Act 1996 (Cth) such that there is now no uniform system of wage setting throughout the country and the amendment then made to the Industrial Relations Act, 1979 (WA) to allow the Commission to review the WA minimum wage and award wages in the absence of a National Wage Case.

46 Prior to the State Wage Case commencing, the Commission requested the s.50 parties to consider the provisions of s.50A(1)(d) of the Act and their application to any statement of principles to be applied and followed, subject to the Commission's exercise of jurisdiction under the Act.

47 In response we have received the following submissions.

The Minister
48 The Minister submitted a draft statement of principles and stated that, "any changes [to the principles] must preserve the objective of the Principles which is to provide a framework for equitable wage setting giving effect to a "safety net" of employment terms and conditions and the demands of the economy".

49 The Minister argued that the Commission is obliged to take into consideration all of the matters set out in s.50A(3) when making a General Order under s.50A(1) and claims that the retention of the principles is no impediment to enterprise bargaining, which is encouraged by the Act, and when making the principles the Commission is obliged to take into account s.50A(3), s.6 and s.26, with the exception of s.26(1)(d) which is specifically excluded by s.26(1a).

50 The Minister submitted that the current Principles 1.3, 2, 4 and 8.3 can be deleted and proposed the addition of the following words after Principle 10.1, "This may include but is not limited to matters such as equal remuneration for men and women for work of equal or comparable value" to give the parties guidance with respect to this matter. The Minister also submitted that Work Value remains an important aspect of the principles.

51 The Minister submitted that the recent practice of the Commission has been to align the minimum award rate with the minimum wage under the MCE Act and if the Commission was to express an intention that these rates will be aligned hereafter then the Minister would support the deletion of Principles 9 and 11.1.1 and 11.1.2. The Minister argued that the reference to service increments should be deleted from Principle 6 as these are more appropriately dealt with under the Work Value principle and the Minister suggested minor changes to other principles.

52 The Minister argued that the TLCWA's position that the principles should only serve as a guide was not consistent with the principles as they exist currently and as Parliament intended they operate. The Minister referred to the Explanatory Memorandum at the time s.50A was inserted into the Act which stated that the Statement of Principles is "to be applied".

53 The Minister contended that the words "other remuneration" can be defined as "payment, reward or recompense for services rendered", it may include commissions, bonuses, allowances and payments by way of reimbursement and fees and it may include benefits other than money. Similarly "prices to be paid" conveys a broad application.

TLCWA
54 TLCWA submitted that the principles are a procedural device formed under the previous National Wage system. With its demise, and with changes made to State and Federal workplace legislation, the principles no longer have relevance to Western Australian wage fixing. TLCWA maintained that the principles should reflect contemporary wage fixing and should be simplified to meet the dual purpose identified by the Commission, that is, to give guidance to parties and to assist the Commission to adopt a consistent approach. TLCWA also submitted that as the Act encourages enterprise bargaining the principles should simply be a guide when setting wages in awards. The primary considerations of the Commission are s.6 and s.26 of the Act and the principles should be flexible enough for the Commission to work with parties in meeting the objects of the Act.

55 TLCWA maintained that the terms "other remuneration" and "in respect of prices to be paid" give the principles wide application and submitted that if these benefits are to be included in awards they should be dealt with under Principle 10. Additionally, the Department of Treasury and Finance Economic Report cites anecdotal reports of increased non-wage remuneration and accelerated classification progression to attract and retain staff.

56 TLCWA argued that the Act requires the Commission to consider the matters within s.50A(3) when making the General Order under s.50 and the Statement of Principles, and it submitted that the current prescriptive and limiting nature of the principles may be contrary to many of the considerations within s.50A(3), in particular the needs as articulated in s.50A(3)(a) and s.50A(3)(e).

57 TLCWA argued that Principle 7 Work Value Changes is still valid but maintains that the clause is too prescriptive. Principle 1 should simply state the purpose of the principles and Principle 5 is obsolete as the method of applying a general standard is by General Orders under s.50.

58 TLCWA re-worded the principles and, in summary, condensed them to six including a Statement of Principles, Adjustment of Allowances, Work Value Changes, Making or Varying an Award in other circumstances not otherwise dealt with, Economic Incapacity and Duration.

59 TLCWA maintained that the Explanatory Memorandum referred to by the Minister may be considered but the words of the Act are what is important; when taking into account the provisions of s.50A(1)(d) of the Act the principles are complementary to the Act and therefore should not be prescriptive.

AMMA
60 AMMA argued that when the Commission is making an order under s.50A(1) it is compelled by the Act to take into account s.50A(3)(a)-(g); however the weight given to each of these matters is at the Commission's discretion.

61 AMMA maintained that the Act requires the principles to be established and to be applied. It stated that AMMA members have not experienced any difficulties with the principles and this may suggest that no change is required to the principles.

62 AMMA submitted that the term "remuneration" denotes a broader concept than salary or wages and maintained that the current reference to "other remuneration" in the 2007 General Order satisfies the Commission's obligations under s.50A(1)(d) of the Act.

CCIWA
63 CCIWA submitted that there should be no material change to the principles. CCIWA argued that the term "other remuneration" in the Act is a term not limited to cash payments but may include non-pecuniary benefits excluding leave benefits and maintains that these benefits may be dealt with under the principles. CCIWA argued that the Commission must consider all factors listed in paragraphs (a) to (g) of s.50A(3) of the Act when making the principles. In CCIWA's view, the principles are to be applied and the Commission should not depart from the current principles.

The State Wage Principles – Conclusions
64 Apart from TLCWA, the Minister, AMMA and CCIWA agree that the principles in their current form fulfil the requirements of the Act and should not be altered in any significant way. Given this level of agreement, and that applications by unions to make or vary awards which would attract the principles are relatively infrequent, we consider that this is the correct approach to adopt with respect to the 2008 Statement of Principles.

65 The Commission stated the following in the 2007 State Wage decision:
"122. We entirely agree with the Minister's submission that the obligation of the Commission to make principles is not met now by adopting, as has occurred in the past, principles derived from principles made by the AIRC; nor is it met by merely adopting without change the Statement of Principles adopted in the 2006 General Order which were made under a different statutory regime. Following the repeal of the former section 51, and the enacting of section 50A, it is necessary, given the requirement under section 50A(1)(d) to set out a Statement of Principles to be applied and followed in relation to the exercise of jurisdiction in relation to wage, salary, allowances and other remuneration matters under the Act, to set out a Statement of Principles which are derived from the Act, its principal objects and the requirement that section 26(1)(a) imposes on the Commission when it exercises its jurisdiction.
123. We consider that the principles serve at least two broad purposes. One purpose is to provide guidance to parties or potential parties. ……..
124. Another purpose is to set out for the assistance of Commissioners sitting singly, and the parties appearing, the approach under section 26(1) to be followed. …….."

66 We repeat these statements. In doing so we consider we are obliged to reject the TLCWA's contention that the principles should serve only as a guide; we do not think the contention is supported by the Act given s.50A(1)(d) which requires that the Statement of Principles "be applied and followed". In our view the Minister correctly referred the Commission to the Explanatory Memorandum to the Labour Relations Legislation Amendment Bill 2006 which at paragraph 71 stated:
"Proposed section 50A(1)(d) requires the WAIRC to annually set out a statement of principles that must, while in no way limiting the jurisdiction of the WAIRC, be applied and followed in all instances of the WAIRC exercising its jurisdiction to set wages. That is, having been set by the Commission in Court Session during the State Wage order proceedings the statement of principles is to be applied by all subsequent proceedings by the WAIRC, whether as constituted by a single Commissioner or a subsequent Commission in Court Session, where the WAIRC is setting wages. It is not intended that the statement of principles would be applicable to non-wage related matters."

67 We have been assisted by the general agreement of the parties that the references contained in s.50A(1)(d) of the Act to "other remuneration" and "prices to be paid in respect of their employment" have broad application and we consider that this is not a matter which requires further elaboration in the Statement of Principles.

68 The changes we propose to make to the principles arise from the suggestions made by the Minister. The word "hereinafter" will be deleted from Principle 1.2. In relation to the suggested deletion of Principle 1.3, we consider that it is important that the principles state that s.26 applies to matters to which the principles apply and we do not propose to delete Principle 1.3.

69 We agree that Principle 2.1 should be deleted on the basis that it merely restates the role of awards that is given to them under the Act. In relation to Principle 4, we are not confident however that all awards are up to date and consider it prudent to retain the principle. We shall also retain Principle 9 because we consider it will assist the reader of an award to determine whether there are any wage rates in the award which may be below the minimum wage rate.

70 We have noted the Minister's submission that a reference to the principle of equal remuneration for men and women for work of equal or comparable value should be included in Principle 10. We agree and have made a consequential deletion of Principle 7.12.

71 The minute of proposed General Order now issues. A speaking to the minutes, if required, will occur on Tuesday, 17 June 2008 at 2:15pm.


SCHEDULE
Footnotes:
























(a)

While data was collected according to the pre-March 2006 workplace relations system, these indicative estimates are compiled according to the post-March 2006 workplace relations system.
(b)

Relative Standard Errors (RSEs) for these data have not been produced in the same way as RSEs for published data. Differences may exist.
(c)


Employees in the federal jurisdiction comprises: employees of employers located in Victoria, the Northern Territory or the Australian Capital Territory, or classified to Type of Legal Organisation (TOLO) codes 1-5, 11 or 21-26; and those employees whose pay was set by a federally registered individual or collective agreement or a federal award.
(d)

Federal award or agreement includes Federal awards, and agreements that have been registered, certified or approved by the Australian Industrial Relations Commission or the Office of the Employment Advocate.
(e)
Includes employees transitioning out of the federal WR jurisdiction.
(f)

State award or agreement includes State awards, and agreements that have been registered, certified or approved under a New South Wales, Queensland, South Australian, Western Australian or Tasmanian industrial tribunal or authority.
(g)
Employees transitioning into the federal WR jurisdiction.
(h)
Unregistered arrangement includes agreements not registered, certified or approved by an industrial tribunal or authority.
(i)
Includes employees receiving overaward pay.
(j)


Employees in state jurisdiction comprises employees of employers located in New South Wales, Queensland, South Australia, Western Australia or Tasmania, classified to TOLO codes 6-8, 20 or 31-33, and whose pay was set by a state registered individual or collective agreement or state award or unregistered individual arrangement.
(k)


Unable to be determined includes employees of employers located in New South Wales, Queensland, South Australia, Western Australia or Tasmania, classified to TOLO codes 9, 12, 15, 16 or 34-36, and whose pay was set by a state registered individual or collective agreement or state award or unregistered individual arrangement.
RSE
Relative Standard Error



































Caveats: As this data is based on information relating to a sample of employers and employees for each year, rather than a full enumeration, they are subject to sample variability. That is, they may vary from the estimates that would have been produced if the information had been obtained from all employers and all employees. The figures produced at this fine level of disaggregation show volatility due to the sample design. The Survey of Employee Earnings and Hours was not designed as a time series so caution should be exercised when comparing data between different years.













© Commonwealth of Australia 2008










Type of Legal Organisation (TOLO)


1
Proprietary
2
Limited
3
Proprietary Limited
4
No Liability
5
Other Registered Company
6
Sole Proprietor
7
Family Partnership
8
Other Partnership
9
Trust
11
Cooperative Society
12
Charitable Institution
15
Social and Sporting Clubs
16
Trade Unions and Other Associations
20
Other Unincorporated Entity
21
Australian Government Department
22
Australian Government Legislature, Courts, etc.
23
Australian Government Municipal Authority in Territories
24
Australian Government Marketing Board
25
Australian Government Other Statutory Authority
26
Australian Government Other (including Government Owned Companies)
31
State Government Department
32
State Government Legislature, Courts, etc.
33
State Government Marketing Boards
34
Local Government Authority
35
Other Local Government
36
State Government Other (including Government Owned Companies)