2011 STATE WAGE ORDER PURSUANT TO SECTION 50A OF THE ACT

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

CITATION : 2011 WAIRC 00399

DELIVERED : FRIday, 10 June 2011

FILE NO. : APPL 2 OF 2011

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 -State wage principles

Legislation : Industrial Relations Act 1979 s 50A, Minimum Conditions of Employment Act 1993 s 12, Fair Work Act 2009 s 26, s 284

Result : 2011 State Wage Order issued

Representation:

Mr A Lyon and Ms S Haynes on behalf of the Hon. Minister for Commerce

Mr J Ridley and with him, Ms J Ridge on behalf of the Chamber of Commerce and

 Industry of WA (Inc.)

Mr A Clark, Ms E Palmer and with them, Dr T Dymond on behalf of the Trades and Labor Council 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 (the State Wage order) setting the minimum wage applicable under s 12 of the Minimum Conditions of Employment Act 1993 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 advertisements in two local newspapers on 5, 7 and 11 May 2011 calling for public submissions.  The advertisement was also published on the Commission’s website and in the WA Industrial Gazette ((2011) 91 WAIG 443; [2011] WAIRC 00291).

3          The Commission sat on 31 May, 1 and 7 June 2011 and heard oral submissions and evidence from the Hon Minister for Commerce, the Chamber of Commerce and Industry of Western Australia (Inc) (CCIWA) and the Trades and Labor Council of Western Australia (TLC).  Written submissions were received from Australian Hotels Association WA Branch (AHAWA), the Western Australian Council of Social Services Inc (WACOSS) and the Employment Law Centre (ELC).  Copies of all submissions were placed on the Commission’s website and the proceedings were webcast.

SUMMARY OF POSITIONS

The Hon Minister for Commerce

4         The Minister submits that while the Western Australian economy is on a steady growth path there are still some sectors experiencing subdued conditions. Further, there continues to be risks in the global economy despite the broad improvements internationally in recent times. In order to balance the needs of employers and employees within the economic context, the minimum wage adjustment should be sustainable with respect to the viability and competitiveness of WA businesses.  The appropriate increase for the State adult minimum wage is 2.75% or $16.20 per week which will maintain the real value of the State minimum wage and of award rates of pay.

5         The Minister reiterates that an inflation-based percentage adjustment is a balanced, responsible and sustainable outcome in the context of the parameters that the Commission is required to take into consideration under s 50A of the Act; the current economic climate; the capacity of Western Australian businesses as a whole to afford an adjustment; and the needs of the low paid who are subject to the State industrial relations system.

6         The Minister is mindful of the uneven recovery of the economy but submits that it is appropriate under s 50A(3)(d) for the Commission to consider the capacity to pay of employers as a whole.  The Minister’s reply submission presents a table (table 14) in support of a submission that all relevant industries in Western Australia are profitable, with only six of the 18 listed industries recording a decrease in profitability for 2009-10.  The Minister also submits that employers in the WA system have not been subject to the same award, penalty rates and associated costs incurred by employers which are in the national industrial relations system and employ staff under modern award pay structures.

7          Detailed submissions were made on each of the statutory criteria which the Commission is obliged to take into account.  The Minister submitted extensive statistical material from the Department of Treasury and Finance in support of his submission, and called evidence from Kurt Sibma, an Assistant Director in the Forecasting and Quantitative Services Division within the Department of Treasury and Finance. 

8          Mr Sibma’s evidence focussed on the overall outlook for the Western Australian economy as outlined in the State budget which was delivered on 19 May 2011, with a strong focus on the State’s labour market.  Overall, the WA economy is expanding at a solid pace, albeit that some sectors of the economy are growing more strongly than others.  He referred to a heightened level of fiscal restraint in WA households resulting in only modest growth in household discretionary spending.  Activity in the State’s established housing market has also weakened noticeably since the withdrawal of federal government stimulus measures and an increase in home loan interest rates over the past 18 months.  At the same time, industries outside the resources sector have been challenged by the high Australian dollar whilst the State’s agriculture sector has been affected by extreme weather conditions, including a long dry spell in the wheatbelt and flooding in Carnarvon and the Gascoyne region of WA earlier this year.  Nevertheless, the overall outlook for the WA economy is generally quite positive.

9         We set out below the major economic aggregates for WA as shown in table 4 of the Minister’s reply submission:

Chamber of Commerce and Industry of Western Australia (Inc)

10      CCIWA requests that the Commission should award only a moderate increase to the adult rate of pay of $12.00 per week up to the tradesperson level and a $10.00 increase to wage levels above the tradesperson rate, with a proportionate increase to juniors, trainees and apprentices.  CCIWA submits this tiered approach is based upon a contemporary assessment of the facts and evidence to promote the role of the minimum wage as a safety net for low-paid employees.   

11      Although much of the uncertainty from the global financial crisis (GFC) in Australia has diminished, in light of the implications of an emerging two-speed or patchwork economy, CCIWA continues to advocate moderation in the consideration of any minimum wage adjustment in 2011.  The natural disasters affecting various areas of WA will affect the capacity and speed of recovery, and these difficulties and uncertainties are further exacerbated by the federal Government’s proposed imposition of a carbon tax on industry.  CCIWA emphasises that national business surveys show firms are still cautious about hiring staff, that there is uncertainty reflected in business and consumer confidence, and that consumer confidence remains fairly weak. 

12      CCIWA remains of the view that it is no longer sustainable that minimum wages should necessarily increase in each calendar year across all phases of the economic cycle; or where there is an increase, that the increase necessarily exceeds inflation.  There is no legislative presumption that requires the Commission to award an increase in each and every State wage case that is at least equivalent to inflation or exceeds inflation.  CCIWA made detailed submissions regarding the tax/transfer system and cautioned that meeting the needs of low paid employees is not consistent with an elevated increase to the minimum wage that sacrifices jobs.  CCIWA contends the following are key considerations for the determination of the minimum wage:

• increases in the minimum wage influence the viability of businesses employing at minimum wage levels – if too high, the business may become unviable;
• increases in the minimum wage must not reduce jobs, or have the potential to promote job loss or inhibit job creation – this is especially important now when economic indices indicate a significant downturn, business closures and rising unemployment;
• the extent of reliance on increases to the minimum wage to assist low income employees must depend and interrelate with tax transfers, income supplementation and other measures provided by the federal and State Governments; and
• increases in the minimum wage must not discourage productivity improvement or substitute for productivity bargaining.

13      CCIWA notes various factors that contribute to some employees not reaching industrial agreements.  In relation to its support for subsidiary wage rates for junior employees, trainees and apprentices, CCIWA submits that given the current economic environment, industrial tribunals need to promote, rather than deter, youth employment, including in regional WA.

Australian Hotels Association WA Branch

14       AHAWA submits that the hospitality industry has experienced difficult conditions over recent periods. Many businesses have seen a decrease in income and a severe shortage of labour, and in particular, skilled labour.  Regional businesses are generally small and primarily sole traders or small partnerships. Businesses such as these often have few staff, with the responsibility falling on proprietors to work longer hours, as they cannot afford to pay employees due to increasing costs. 

15      Hospitality businesses have already incurred increased costs from recent changes to legislation involving banning indoor smoking and an increasing excise on alcoholic products.  Patronage has reduced as there has been less household disposable income.  Small business has been significantly affected by increased tariffs on utilities. The Carnarvon floods heavily affected the WA hospitality industry.  Income for businesses within the hospitality, tourism and retail sectors has reduced as Australians in general are choosing to travel to Bali and Asia, rather then holidaying in the State, as demonstrated by statistics from both the Australian Bureau of Statistics (ABS) and the Bali Tourism Board.

16      AHAWA recommends that the federal minimum wage and the State minimum wage should be on par. As the State minimum wage is higher at $587.10, the federal minimum wage should rise from $569.90 and the State minimum wage should remain the same, or alternatively, transition over the next two years until the federal minimum wage catches up to it.  If there is to be an increase to the State minimum wage, consideration should be given to a 1.0% ($5.90) to 1.5% ($8.80) increase.

Trades and Labor Council of Western Australia

17      The TLC seeks a 5% increase to the minimum wage and to award wages which would be an increase of $29.36.  It refers to the recent Commonwealth Budget forecast that the national economy is forecast to grow at an above-trend rate in 2011-12 and 2012-13.  It states that its claim is modest and reasonable, and takes into consideration a variety of factors impacting the WA and national economies.  The TLC also states that the cost of living impacts that fall disproportionately on low wage workers. It is lower than recent TLC claims that were based on the WA Wage Price Index (WPI).

18      The TLC refers in detail to previous increases to the WA minimum wage, and also the corresponding movements in Average Weekly Earnings (AWE) and the WPI.  It gives consideration to those industry divisions with significant numbers of unincorporated businesses and concluded that industries that may predominate in the State award system are by no means fully sharing in WA’s economic expansion.

19      The TLC contends that Consumer Price Index (CPI) should be disaggregated for low paid employees for whom some costs have more impact than others and it provided detailed submissions on this issue.  For seven out of the last ten years, the year-on-year increase in costs for households has been higher than CPI.  It draws attention to the gender pay gap in WA continuing to be larger than the national gender pay gap and that it has appeared to be getting larger even as the national gap is getting smaller.  The TLC submits that while the minimum wage is not the only factor in determining the gender pay gap, it is likely that the gap will be worse if strong minimum wage increases do not occur on a regular basis.

20      In relation to employer capacity to pay, the TLC refers to a study by the Workplace Research Centre of the impact of the 1 July 2010 federal minimum wage increase of $26.00 per week on employers and employees to conclude that the impact had been slight.   The TLC also refers to the impact of minimum wages upon apprentices, and concluded that unless regular and generous increases in apprenticeship wages flow on from decisions such as those from the minimum wage, apprenticeships will become increasingly unattractive.

21      The TLC called Professor Paul Flatau, Chair in Social Investment and Impact and Director of the Centre for Social Impact at the University of WA Business School to give evidence.   In Professor Flatau’s view, economic conditions in WA are presently strong and are projected to remain so for the foreseeable future.  Economic growth in WA’s major trading partners is also expected to remain strong in the foreseeable future.  Business investment and subsequently export growth are likely to be key drivers of economic growth in WA over the next four years, with household consumption also strengthening during this period.

22      Professor Flatau produced data showing that the small increase in the real value of the WA minimum wage over the last decade compared to relatively strong growth in real AWE in WA means that the relative position of low paid workers reliant on State-based minimum wages has worsened over the decade, which impacts adversely on the overall fairness of WA wage outcomes.  When growth in the wages of low paid workers is constrained, the incentive for the unemployed and those marginally attached to the labour market to take on training opportunities, look for work and accept employment opportunities, is affected.  The latest available data show that the gender pay gap in Australia is 17.2% while the gap for WA is 27.1%.  On average, women in WA are earning what they do in Australia generally while men are earning considerably more. A rise in the WA minimum wage in real terms will act to work positively on the gender pay gap in WA. 

WA Council of Social Services

23      WACOSS has a particular interest in the adequacy of living standards and quality of life experienced by Western Australians living on a low income.  Many organisations in the community services sector are incorporated entities without significant or substantial trading or financial activities, and are therefore subject to the Commission’s jurisdiction.

24      WACOSS’s submission shares similar principles with the TLC submission.  At a minimum, the increase should be 5.0%, or $29.36 per week.  The rationale for the claim takes into account a range of economic pressures in Western Australia, such as:

•  A significant increase in the price of utilities which have increased by an average of 24.3%.

•  Significantly larger increases for items that impact most on low income households, even though the overall CPI increase was 2.6% in the year to March 2011; and

•  AWE in WA in the year to November 2010 increasing by 5.4%.

25      Although the headline CPI increase for Perth in the year to March 2011 is 2.6%, while the rest of Australia (weighted average of eight capital cities) is 3.3%, Perth (and indeed the whole of WA) continues to be an expensive city in which to live, reflected by the CPI figures for Perth over the past five years.  WACOSS has long argued that the headline CPI figure is inadequate as a measure of the cost of living for low income earners due to the composition and weighting of the basket of goods used to calculate the CPI.  The Commission should have regard to the composition of low-income earners’ budgets when judging the adequacy of any proposed minimum wage increase with respect to the cost of living.  An approach that merely examines the ‘headline’ CPI figure is inadequate.  An approach that merely aims to preserve the real value of the minimum wage by adjusting it by the headline CPI (2.6%) will in fact represent a reduction in the minimum wage’s real value.

26      WACOSS draws the Commission’s attention to the community services sector and to WA having the largest gender pay gap of any State in Australia. While the national gender pay gap has remained relatively constant for the last two decades, fluctuating between 15% and 17%, the gap in WA has increased significantly.

27      WACOSS submits that adequate minimum wages make a significant contribution to economic growth and efficiency.  Increases in minimum wages are an effective way to improve incentives for jobless people.  WACOSS therefore urges the Commission to have regard for the high number of underemployed, and the positive impact a modest minimum wage increase will have on these vulnerable workers.

The Employment Law Centre

28      ELC submits that an adequate minimum wage protects employees from poverty.  The Australian economy has experienced significant growth throughout 2010 and the beginning of 2011, exceeding even the most optimistic forecasts for post-GFC recovery.  Households reliant on the minimum wage are under mounting pressure due to increases in consumer prices.  The Analytical Living Cost Index (ALCI) for employee households rose 4.5% for the year to the December quarter 2010.  Fuel and energy cost increases have been significant.  ELC supports ACOSS’s recommendation of an adequate minimum wage to reduce poverty among working households.  An increase to the minimum wage also is a way of addressing, amongst other things, gender pay inequity.  Participation in employment maintains personal dignity, pride, self-worth and connection to the community.  ELC endorses the 5% increase sought by TLC.

CONSIDERATION

29      The matters which the Commission is obliged to take into account are set out in s 50A(3) of the Act as follows:

50A(3) In making an order under this section, the Commission shall take into consideration —

  (a) the need to —

(i) ensure that Western Australians have a system of fair wages and conditions of employment;

(ii) meet the needs of the low paid;

(iii) provide fair wage standards in the context of living standards generally prevailing in the community;

(iv) contribute to improved living standards for employees;

(v) protect employees who may be unable to reach an industrial agreement;

(vi) encourage ongoing skills development; and

(vii) provide equal remuneration for men and women for work of equal or comparable value;

(b) the state of the economy of Western Australia and the likely effect of its decision on that economy and, in particular, on the level of employment, inflation and productivity in Western Australia;

  (c) to the extent that it is relevant, the state of the national economy;

(d) to the extent that it is relevant, the capacity of employers as a whole to bear the costs of increased wages, salaries, allowances and other remuneration;

(e) for the purposes of subsection (1)(b) and (c), the need to ensure that the Western Australian award framework represents a system of fair wages and conditions of employment;

  (f) relevant decisions of other industrial courts and tribunals; and

  (g) any other matters the Commission considers relevant.

Coverage of the Order to Issue

30      We have been assisted by the careful and detailed submissions before us and approach the task of setting the minimum wage for 2011 in the following manner.  All persons appearing in these proceedings acknowledge that the minimum wage which will be set by the order to issue from these proceedings will not apply to all employers and employees in WA even though the language particularly in s 50A(3)(a), (b) and (d) might suggest otherwise.  As a result of s 26 of the Fair Work Act 2009 (Cth) (FW Act) the minimum wage set from these proceedings is likely to have application principally to businesses in the private sector which are unincorporated.  We received submissions and some recent data regarding that coverage.  We do not see it necessary to reconsider our conclusion in the 2009 State Wage Order decision, and no-one requested that we do so, that of the approximately 30% of State’s workforce (both public and private sector), the State Wage order directly affects approximately 2.2% of WA employees with a further 1.8% indirectly affected ((2009) 89 WAIG 735 at 739; [2009] WAIRC 00375 at [37]).

The Statutory Criteria

31      Turning to the matters we are obliged to take into consideration, the concept of “fairness” in relation to wages and conditions of employment (s 50A(3)(a)(i)), and in relation to wage standards in the context of living standards generally prevailing in the community (s 50A(3)(a)(iii)), suggest to us that changes to wages and living standards which have occurred since the 2010 State Wage order provide a useful starting point.  The CPI for Perth to the March quarter has increased by 2.6% and by 2.75% on an annual average basis.  On this occasion, the TLC, WACOSS and ELC have presented material to show that the CPI underestimates the increases in cost of living expenses experienced by low paid employees. 

32      ELC, WACOSS and TLC each emphasises the increases in living costs for low paid employees and reference was made to the ABS Analytical Cost of Living Index which shows an annual increase in living costs for employee households of 4.9% in the March quarter 2011.  The index also shows that for seven out of the last ten years, the year-on-year increase in costs for households has been higher than the CPI.  We consider that this evidence is to be taken into consideration within the concept of “fairness” in relation to wages and conditions of employment, and in relation to wage standards in the context of living standards generally prevailing in the community - although by themselves they are not determinative. 

33      Further assistance regarding the changes to wages and living standards generally prevailing in the community can be seen in part by movements in both the WPI and AWE.  The annual average growth in the WPI in WA has been 3.8% and in AWE has been 4.7%.  In relation to the AWE movement we acknowledge it will necessarily measure earnings across the State, including of employees in relatively high-wage sectors such as mining which are not likely to be representative of wages and living standards generally prevailing in the community, and accordingly attach lesser weight to that index. We recognise, as the Minister submits at paragraph 36, and for the reasons that the Minister states, that minimum wage adjustments remain the primary mechanism for maintaining the purchasing power of employees in low-paid sectors of employment with limited ability to bargain (s 50A(3)(a)(v)).   

34      Of relevance too is the material from both the Minister (submission at p 6) and from Professor Flatau (witness statement figure 1) that the minimum wage has declined relative to average earnings in the past decade in both nominal and real terms.  Over the period 2000-2010, the real adult minimum wage in WA has increased by 8.4%-8.5% while the real increase in Average Weekly Ordinary Time Earnings was 28.4% and the AWE has increased by between 28% and 30%.  This demonstrates that the relative position of low paid workers reliant on the WA minimum wage has worsened over the decade compared to wage earners in the community generally, which impacts adversely on the overall fairness of the minimum wage in WA.

35      CCIWA submits (at paragraph 42) that there is no legislative presumption that requires the Commission to award an increase in each and every State wage case that is equivalent to inflation or exceeds inflation.  We nevertheless consider that it is difficult to take into consideration the need to meet the needs of the low paid (s 50A(3)(a)(ii)) and the need to contribute to improved living standards for employees (s 50A(3)(a)(iv)) without giving some weight to measures which are available to assess the relative value of the minimum wage over time.  A benefit of increasing the minimum wage lies in it making employment attractive to those who are unemployed and able to work and it can also contribute to productivity levels of small businesses.

36      In relation to the need to protect employees who may be unable to reach an industrial agreement (s 50A(3)(a)(v)), we accept the observation of the Minister that the bargaining power of employees in lower paid sectors of the labour market is affected by their skill level, age, gender profile and working hours arrangements.  Employees unable to reach an industrial agreement are more likely to be female, low-skilled, under 24 years old and perhaps employed in a non-permanent job.  Their ability to improve their labour market position through collective or individual bargaining may be limited.  Community and social service employees, and sales employees have a relatively high reliance on minimum award rates of pay (Minister submission, table 7).  We recognise also, as did CCIWA, that particularly since 2006, the number of industrial agreements registered has declined but this is likely to be for reasons not related to past increases to the minimum wage.  We consider that an increase to the minimum wage will protect such employees.

37      The Minister in particular points to the need to encourage ongoing skills development (s 50A(3)(a)(vi)) whilst recognising that ongoing reform of apprenticeship and traineeships is not a matter of itself for these proceedings.  We recognise that a separate review of State awards would ordinarily provide a vehicle for such reform in WA, although to do so in advance of the proposed legislative reform which is referred to in the Minister’s attachment B would appear premature.  In relation to increases in the minimum wage, we note that the total number of people entering into apprenticeships and traineeships has remained broadly consistent over a number of years and it appears likely that past increases to the minimum wage have not had a significant impact upon this. 

38      The obligation on us to take into consideration the need to provide equal remuneration for men and women for work of equal or comparable value (s 50A(3)(a)(vii)) was also emphasised in these proceedings.  We have found it helpful to distinguish between that need and the gender pay gap, as the TLC did in its oral submission.  As recognised by TLC, there is no attempt to put any evidence before us of a significant change between the relative numbers of men and women who are receiving the minimum wage.  We recognise that in the private sector in Australia, women are much more likely than men to be dependent on the award rate and therefore annual increases to the minimum wage (T. Jefferson and A. Preston (2010) Labour Markets and Wages in Australia in 2009, Journal of Industrial Relations Vol 52 p.347).

39      In relation to the gender pay gap, there is no question that the gender pay gap in WA is greater than any other State, and indeed for the nation as a whole.  The reasons for this are complex, and there are inherent limitations to the role which the minimum wage can play in reducing the overall gender pay gap, as has been recognised in the FWA Research Report 5/2011 at page 69 to which we were referred.  That report further reflects (at p 49) on the causes and dimensions of the gender pay gap identified by the International Labour Organisation (table 3.1) such as:

• years of education;
• fields of specialisation;
• seniority in the job;
• size of the enterprise;
• women underrepresented in higher paid jobs;
• women and men concentrated in different segments of the same broad occupations;
• women over-represented in part-time work;
• differences in the number of hours devoted to paid work (men work longer hours (in paid work) than women);
• different job titles (and pay) for the same or similar occupations;
• undervaluation of the skills, competencies and responsibilities associated with ‘female’ jobs;
• gender biases in job evaluation methods; and
• gender biases in job remuneration systems.

40      The scope for us to address these issues in State Wage Order proceedings is necessarily limited and it prompts us to again draw attention to the capacity, as yet unexplored, within Principle 10.1 of the State Wage Principles to allow the Commission to enquire into the issue subject to an application being referred to the Commission.  Nevertheless, we consider it is more likely that women are more reliant on the minimum wage than men.

41      We once again express our thanks to the Department of Treasury and Finance in presenting evidence to us regarding the economic outlook of the global, national and WA economies.   In relation to WA, we observed in our 2010 decision that there were indications that WA was on a relatively sturdy footing towards recovery.  The evidence before us now is that overall, the WA economy is expanding at a solid pace, albeit that some sectors of the economy are growing more strongly than others.  Consumer spending is subdued, however the outlook for business investment in WA is positive. 

42      Conditions in the labour market have improved since the GFC.  Employment growth has gathered pace since 2009 and the outlook for employment demand is quite positive.  WA’s participation rate is the highest of all States at 68.2% over the 12 months to April 2011 and WA’s unemployment rate is likely to remain relatively low in 2011-12 at 4.5%, which is lower than the average of 4.9% over the last decade.  Wages growth is just below the long-term average.

43      The evidence before us shows that the WA economy as a whole is recovering strongly from the economic crisis of 2009.  However there are risks to the otherwise positive outlook.  Parts of the State have been affected by unfortunate weather events.  There remain some ongoing effects from the GFC in that a weak housing market and subdued consumer spending has contributed to difficult trading conditions showing in the retail and hospitality sectors, both of which will contain employers and employees likely to be affected by increases to the WA minimum wage.  Even though retail sales have improved, registering a 0.8% increase in April 2011, this increase is from a low base.  We are obliged to take into account the capacity of employers as a whole to bear the costs of increased wages, salaries, allowances and other remuneration (s 50A(3)(d)) and do so by moderating somewhat the size of the increase we might otherwise have considered awarding. 

44      We are obliged also to consider the likely effect of our decision on the WA economy and, in particular, on the level of employment, inflation and productivity in WA.  In doing so, we note that there is no evidence before us of the likely effects on those factors of previous increases we have awarded to the minimum wage.  We consider that is consistent with the conclusions of Professor David Plowman, of the Graduate School of Management, University of WA, in his 2006 report to the Commission.  This report analysed the operation of the WA minimum wage between 1990 and 2005 and concluded, amongst other things, that there has been little minimum wage effect on the economy as a whole, and weak effect on those sectors with higher levels of low paid employees.  Minimum wage increases have had only minor effects on employment.  In particular, Professor Plowman suggests that aggregate demand in the WA economy moderates, to a considerable extent, any minimum wage effects.  The absence of any evidence, or submission, in the four State Wage cases we have held since Professor Plowman’s report to us, allows us to conclude that his conclusions are still valid.  We have noted the relatively strong position of the WA economy as a whole and the positive outlook for the economy.  We conclude that the increase to the minimum wage which arises from this decision too will have little effect on the level of employment, inflation and productivity in WA.

45      The information before us shows that the national economy is performing well relative to other developed economies.  Recent natural disasters impacted on growth in the first quarter of 2011 with the national economy shrinking by 1.2%.  However, the Commonwealth Government predicts above-trend growth in GDP of 4.0% in 2011-12, and of 3.75% in 2012-13.  Retail sales rose 1.1% in April 2011 which lends some support to that prediction.  The Reserve Bank of Australia has increased the official cash rate four times during 2010 and there is anticipation of at least one further rate rise in 2011.  Employment has grown above-trend and unemployment has declined to just under 5%.  

46      We are to take into consideration relevant decisions of other industrial courts and tribunals (s 50A(3)(f)) and note formally that the minimum wages in the other States were increased in 2010 and that WA’s minimum wage is less than the minimum wages in NSW and Queensland and more than in the remaining States.  Those States’ minimum wages are now not applicable to private sector employment in those States; the minimum wage that is applicable to private sector employment in those States, and which we do consider to be more relevant however, is the minimum wage applicable to employers and their employees in WA who are covered by the national system.  We note in particular that the minimum wage to be set in these proceedings will apply to the same types of businesses, and in the same industry sectors in the national system; the difference between those businesses in the national system and those in the WA system is not a difference in capacity or location, but only in the employer’s business structure.  Following the June 2011 decision of Fair Work Australia in its Annual Wage Review ([2011] FWAFB 3400) the national minimum wage increased by 3.4% from $569.90 to $589.30.

47      Even though there is some correlation between the level of the WA minimum wage and the level of the minimum wages set by other States’ industrial courts and tribunals, for historical reasons, the national and WA minimum wages are set at different levels.  The increase resulting from this decision will again mean that the WA minimum wage will be higher than the national minimum wage.  There was no support for the AHAWA’s submission that there should be no increase to the WA minimum wage which would also allow an alignment to occur between them and we consider that s 50A(3) would not permit this to occur merely to achieve such an alignment.

CONCLUSION

48      Necessarily, our decision takes into consideration the evidence and submissions before us.  Whilst it may be expected that the evidence and submissions will be similar on each occasion we sit to consider setting the WA minimum wage, it is the case that there is scope on each occasion for evidence to be directed to particular factors upon which persons wish to place particular emphasis.  On this occasion, the evidence from both the Minister and TLC WA, including that from Professor Flatau highlighted the decline in the value of the WA minimum wage relative to average earnings over the last decade.  We consider the WA minimum wage is a vital contributor to maintaining a reasonable standard of living in the context of living standards generally. It is an important component of a broader safety net to ensure that WA has a system of fair wages and conditions.

49      We consider that this as a separate issue would encourage consideration of a significant increase in the minimum wage.  It is, however, only one of the issues relevant to the matters which we are obliged to take into consideration in the context of the State’s economy.  There is no argument that the business cycle and its impact on wage increases and the capacity to pay of the overall economy is a relevant consideration and we have referred to those sectors of the economy still showing effects of the GFC.  We have noted that the employees who will receive the benefit of the increase arising from this decision are a relatively small number of employees in the private sector who are on, or just above, the minimum wage and therefore who are unable to bargain for higher wages.  It will not directly affect those in the private sector who are paid above the minimum wage and has no relevance to, or application in, the public sector.

50      On this occasion, we favour a flat-dollar increase rather than a percentage increase.  This in large part is due to the emphasis we wish to place upon those employees who are on the minimum wage or slightly above it rather than those on higher award wages together with the absence of any evidence of issues having arisen from any compression of award relativities from past flat-dollar increases. 

51      We consider that the balance of the evidence and submissions before us in the context of the considerations under s 50A(3) of the Act permits an increase to the minimum wage which tends more towards addressing in a modest way the decline in the value of the WA minimum wage relative to average earnings than an increase based principally upon the notions of maintaining purchasing power and set the WA minimum wage at $607.10 per week.

52      The presumption in s 50A(5) of the Act that the State Wage order takes effect on 1 July in the year it is made and the minimum wage to be set also takes effect from that date.  The new minimum wage will take effect from the commencement of the first pay period on or after 1 July 2011.

53       We are obliged by s 50A(4) to ensure, to the extent possible, that there is consistency and equity in relation to the variation of awards.  No person appearing submitted that we should not correspondingly adjust rates of wages paid under awards.   Given that position, and the role of awards in providing fair wage standards, we will adjust award wages by $19.90 per week from the first pay period on or after 1 July 2011.  The 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.

The Minimum Weekly Rate of Pay Applicable to Apprentices and Trainees

54      Section 50A(3)(a)(vi) requires the Commission to take into consideration the need to encourage ongoing skills development.  The evidence before us shows that previous minimum wage increases for apprentices and trainees have not discouraged their uptake in WA.  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.  We propose to apply the increase to adult apprentices, other apprentices and to trainees in accordance with the usual practice of the Commission. 

Industry/Skill Levels

55       As in previous years, the Minister has provided an updated industry/skill level classifications table based on advice from the Department of Education and Training.  This updated table will be included in Attachment A to the 2011 State Wage order to issue.

THE STATE WAGE PRINCIPLES

56      No person suggested that any change is required to be made to the State Wage Principles.  Section 50A(1)(d) of the Act obliges the Commission to set out a statement of principles to be applied and followed in relation to the exercise of jurisdiction to set the wages, salaries, allowances or other remuneration of employees or the prices to be paid in respect of their employment.  The Statement of Principles July 2011 to issue remains unchanged from the Statement of Principles July 2010 apart from the necessary and consequential amendments to Principle 9.

MINUTE OF PROPOSED GENERAL ORDER

57       A minute of proposed General Order now issues.  The Commission should be advised by 2.00pm on Tuesday, 14 June 2011 whether or not a speaking to the minutes is requested.  If a speaking to the minutes is necessary, it will be dealt with on the papers and written submissions should be received by 10.00am on Thursday, 16 June 2011.