State Wage Case 2001 [2001] NSWIRComm 119

[2001] NSWIRComm 119

Industrial Relations Commission (NSW)|2001-07-01|Before: Wright J, Walton J, Hungerford J, Sams DP, Boland J, Grayson DP, Fisher P, Macken JJ, Mr P

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At a glance

Source facts

Court

Industrial Relations Commission (NSW)

Decision date

2001-07-01

Before

Wright J, Walton J, Hungerford J, Sams DP, Boland J

Source

Original judgment source is linked above.

Judgment (307 paragraphs)

[1]

CITATION : State Wage Case 2001 [2001] NSWIRComm 119 Labor Council of New South Wales Minister for Industrial Relations Public Employment Office The Australian Workers' Union, New South Wales Employers First and affiliated organisations Australian Business Industrial Australian Retailers Association, New South Wales Division PARTIES : The Australian Industry Group New South Wales Branch The Registered Clubs Association of New South Wales New South Wales Road Transport Association Inc Motor Traders' Association of New South Wales Local Government Association of New South Wales Shires Association of New South Wales Catholic Commission for Employment Relations State Chamber of Commerce and Industry (Industrial Relations) Association FILE NUMBER: IRC 3025 of 2001 CORAM: Wright J President; Walton J Vice-President; Hungerford J; Sams DP; Boland J; McKenna C CATCHWORDS : State Wage Case - Summons to show cause - Wage Fixation - Economic climate - Needs of low paid workers - Adoption of Safety Net Review - Wages May 2001 decision of the Australian Industrial Relations Commission - $13.00 per week increase in award rates up to and including $490.00 per week, $15.00 per week increase in award rates above $490.00 per week up to and including $590.00 per week and $17.00 per week increase in award rates above $590.00 per week - Adjustment of 3% to award allowances and junior monetary rates - Increase in award review classification rate to $413.40 per week - State Wage Case 2000 Wage Fixing Principles continued with modifications - Modification to Principle 8(g) concerning the phasing-in of increases from previous State Wage Cases - Modification to Principle 13, First Award and Extension to an Existing Award - Modification by general order to standard Anti-Discrimination clause to be inserted in awards - Modification by general order to criteria for approval of enterprise agreements - Orders made permitting access to the wage increases in accordance with the Principles on separate application for variation of awards. Anti-Discrimination Act 1977 LEGISLATION CITED : Anti-Discrimination Amendment (Carers' Responsibilities) Act 2000 Industrial Relations Act 1996 s3(a) s3(f) s10 s19 s33(4) s48 s50 s51 s52 s169 s406 Pt1 of Ch2 Pt2 of Ch2 Pt3 of Ch2 Workplace Relations Act 1996 (Cth) Equal Remuneration Principle (2000) 97 IR 177 Hospitality Industry - Accommodation, Hotels, Resorts and Gaming Award 1998 (Print R4975) Pastoral Employees (State) Award (unreported, Grayson DP, IRC99/5032, 14 December 2000) Pastoral Industry (State) Award [2000] NSWIRComm 27 Principles for Approval of Enterprise Agreements (1996) 94 IR 98 Principles for Approval of Enterprise Agreements 2000 (2000) 101 IR 332 Safety Net Review - Wages - April 1997 (1997) 71 IR 1 Safety Net Review - April 1998 (1998) 79 IR 37 Safety Net Review - Wages - April 1999 (1999) 87 IR 190 Safety Net Review - Wages - May 2000 (2000) 95 IR 64 Safety Net Review - Wages - May 2001 (Print PR002001) CASES CITED : State Part-Time Work Case (1998) 78 IR 172 State Wage Case - July 1986 (unreported, Fisher P, Watson and Macken JJ, 86/696 and 86/697, 30 July 1986) State Wage Case - August 1988 (1988) 26 IR 24 State Wage Case - August 1988 (No 2) (1989) 27 IR 360 State Wage Case - August 1989, Re Minimum Rates Adjustment [1989] 35 IR 183 State Wage Case - May 1991 (1991) 36 IR 362 State Wage Case - December 1993 (1993) 52 IR 157 State Wage Case - December 1994 (1994) 57 IR 1 State Wage Case - August 1997 (1997) 73 IR 200 State Wage Case - June 1998 (1998) 79 IR 416 State Wage Case 1999 (1999) 88 IR 363 State Wage Case 2000 (2000) 97 IR 93

[32]

14 On the needs of low paid workers, the AIRC expressed the following conclusions: As noted in previous decisions the statutory scheme does not give to the Commission a supervening social welfare responsibility either for incomes generally or their distribution. The scheme regulates wages and conditions of employment and requires the adjustment of the minimum wages safety net contained in awards having regard to particular considerations. The information about income levels and distribution provided by the parties is informative of Australian living standards. However, it must be taken into account having regard to the limited nature of our task and statutory responsibilities. In the April 1999 decision the Commission said: "Considering the needs of the low paid requires the exercise of judgment as to varying income levels and the resultant living standards attained in the Australian community. There is clearly a gap between income levels derived from bargaining and those provided by the award system. The evidence and submissions inform the Commission in its task of adjusting the safety net. Central to the adjustment of the safety net consistent with ss.88B(2) is a consideration of the economic factors, the desirability of attaining a high level of employment and the needs of the low paid. In this context we reject the proposition that the low paid include people who are unemployed. The relevant statutory provisions deal separately with the low paid and the unemployed and the expression 'the low paid' in ss.88B(2)(c) is intended to refer to persons who are in employment. However, we are required by ss.88B(2)(b) and 90(b) to take the level of employment into account and we have done so. Many low paid employees are unable to afford what are regarded as necessities by the broader Australian community." The Commission reiterated that conclusion in the May 2000 decision. We again see no reason to depart from it. The evidence presented in this case again revealed that employees on low wages do experience difficulties making ends meet and in affording what are generally considered by the broader community as basic necessities. In this context we note the disagreement between the parties about the size of the group of employees in this position. It is not necessary, even if it were possible, to identify the size of the group in order to reach a decision in this case. We acknowledge that the material does indicate that people on low incomes face particular difficulties and that is one of the factors which we have taken into account.

[34]

15 A significant issue in the proceedings before the AIRC was that of wage relativities. The AIRC noted that on a number of previous occasions it had drawn attention to the erosion of relativities between award classifications where a uniform dollar adjustment occurs. The AIRC referred to its May 2000 decision where it had indicated that on the next occasion it expected to be addressed on this issue and whether a percentage adjustment is appropriate "to ensure that the award system provides fair wages for employees paid at the middle and upper award classification levels." Consequently, all major parties made submissions on this issue. The ACTU sought a flat adjustment up to the level of C10 classification in the Metal Industry Award and a percentage increase above C10 to ensure fairness for middle and upper classification levels. State Labor governments supported the ACTU, submitting that the adoption of the ACTU's proposal would provide a fair safety net for middle and upper classifications while still emphasising the needs of the lower paid through a flat money increase. 16 The Joint Coalition governments supported a flat increase capped at the C10 level. They argued, inter alia, that safety net adjustments should continue to target the low paid, with the role of relativities being confined to those between awards. It was submitted that the labour market no longer requires the structural efficiency principle because workplace relations are now focussed at the enterprise level, thereby the continuance of historical relativities is no longer relevant. 17 The ACCI argued that relativities are a matter for the market and will be set by the market. The AiGroup argued that there is a fundamental tension between protection of the low paid and protection of skills based classifications. However, it did not consider that flat increases had reached the point where they threatened the integrity of the relativity structure. The AiGroup agreed with the State Labor governments that this point had not been reached. 18 In dealing with the submission of the Joint Coalition governments that the legislative scheme no longer supports higher award classification increases under safety net adjustments, the AIRC reaffirmed its previous rejection of that submission: It is true that s88B(2)(c) of the Act provides that when adjusting the safety net the Commission must pay regard to the needs of the low paid. However we do not think that this object can be elevated in such a way as to displace the obligation on the Commission to maintain a safety net of fair minimum wages for all employees. In this respect we do not see how the use of the plural term " wages " can be ignored. We are fortified in this conclusion by two additional factors. First, s89A of the Act provides that classifications of employees and skill based career paths are allowable award matters. We think it follows that where classification structures and skill based career paths are included in awards they are a relevant feature of the safety net of fair minimum wages and conditions which the Commission is obliged to maintain. Second, awards play an important role in the operation of the no disadvantage test. Agreements for which certification is sought under other divisions of the Act must be tested against appropriate safety net awards. In this context it would be incongruous if the Commission was not obliged to maintain fair minimum wages for employees at higher levels of the award structure. While there may be circumstances in which a safety net adjustment may be appropriate only at lower classification levels, we do not accept that such a position is an inevitable consequence of the present legislative scheme. 19 In granting an increase, the AIRC concluded that: … On this occasion we think that it is appropriate to recognise the different impact of flat dollar increases at the different award classification levels by awarding higher amounts at the middle and upper levels. At the same time while the increase at the lower level is substantial it is not so great as to put undue pressure on employment. The amount and form of the increases are an appropriate outcome to the ACTU's claim. The form of adjustment is appropriate for reasons of fairness and as a measure towards avoiding the further compression of relativities between job classifications. Furthermore the result is consistent with the obligations upon us to have regard to economic factors, including the desirability of attaining a high level of employment, and to have regard to the needs of the low paid. The adjustment will be the following: 1. a $13.00 per week increase in award rates up to and including $490.00 per week;

[44]

21 The position of the Labor Council was that the wage increases awarded in the National decision should be adopted in New South Wales. However, the Labor Council registered its disappointment at the level of wage increases awarded. The Labor Council foreshadowed its intention to pursue a "Secure Employment Test Case which is designed to assist low paid workers move out of casual and contract work to more regular and secure employment." The Australian Workers' Union, New South Wales ("AWU") appeared in the proceedings to make submissions on problems it had experienced with the operation of Principles 8(b), (g) and (h) of the present State wage fixing principles but otherwise supported the position of the Labor Council. The position of the Minister for Industrial Relations and the Public Employment Office ("the Minister") was that this Commission should adopt in full the increases emanating from the AIRC decision and apply them to New South Wales awards. Employers First, its affiliated organisations and The Australian Retailers' Association, New South Wales Division ("Retailers' Association") submitted that in their view the increases awarded by the National decision were too high having regard to the state of the New South Wales economy and its expected performance. Those employers also noted there were no efficiency gains or offsets in return for the wage increases awarded. Nevertheless, recognising the imperatives of s50 of the Act, those employers did not oppose the adjustment arising out of the National decision. Australian Business Industrial ("ABI") and The Registered Clubs Association of New South Wales ("RCA") took the position that, having regard to s50 of the Act, they did not oppose the increases awarded in the National decision flowing to New South Wales awards. The Australian Industry Group, New South Wales Branch ("AiGroup"), Catholic Commission for Employment Relations ("CCER"), State Chamber of Commerce and Industry (Industrial Relations) Association ("SCC"), Motor Traders' Association of New South Wales ("MTA"), Local Government Association of New South Wales ("LGA"), Shires Association of New South Wales ("SA") and the New South Wales Road Transport Association Inc. ("RTA") (referred to collectively as "the combined employers") expressed support for the position of Employers First and ABI. The Evidence 22 A statement by Janelle Hindmarsh, a single mother with one child residing in Fairfield West, was filed by the Labor Council in the proceedings. Ms Hindmarsh is a qualified childcare worker working 40 hours per week for a gross wage of $536.60 per week ($434.50 after tax). Her statement went to the difficulties of an employee in her position meeting weekly living expenses and, at the same time, attempting to save in order to pay rent on a home. She described in her statement the additional strain caused by unplanned expenses such as car repairs. In her statement Ms Hindmarsh said: I understand that if the State Wage Case follows awards the same amount as the National Wage Case I would get $15 per week extra. With that amount of extra money it will make very little impact on my standard of living or my aspirations to live in a home of my own. 23 Ms Hindmarsh was not required for cross-examination. In relation to her evidence, Mr C Christodoulou, appearing for the Labor Council, said: Janelle Hindmarsh's evidence is intended simply to remind this Commission as it ploughs through the reams of economic data about the state of the economy that there are hundreds of thousands of workers out there who need a real boost in their wages …

[46]

· There remains a small risk that Australia will slip into recession in 2001. However, the fundamentals remain good. This is not a 1991 economy, crushed by 18% interest rates. Nor is it a 1982 economy, crushed by excessive wage rises. This gives hope that late 2001 will bring renewed good growth. · Growth in NSW is likely to lag Australia as a whole in 2001 and 2002. The State's good run has come to an end, and a post-o1ympics hangover has taken hold. NSW might avoid a recession in 2001, but it may be a narrow miss. As for Australia as a whole, recovery is imminent and by 2002-03, both NSW (5.0%) and Australian (4.9%) growth is forecast to be back on track. · The fall-off in demand is even sharper than that in output. As is typically the case in any downswing, the fall in demand currently underway is sharper still than that in output (GDP, or 'supply'). · The outlook for employment is weak. The number of jobs in NSW in 2001 is projected to contract by 0.4%, compared with growth of 0.8% for Australia. Job weakness continues until mid-2002, but is then forecast to grow strongly for the remainder of the year, so that calendar 2002 should see 2.2% jobs growth in NSW (1.7% for Australia). · These developments are not a major surprise. Access Economics' submission to the State Wage Case 2000 noted that "Theory suggests sustainable wage rises based on productivity improvements, and that there is a clear trade off between wage rises and job gains. The trade-off is sharper when conditions are worsening, so slower demand in NSW in 2001 would accentuate the job cost of any non-productivity based wage rises. The implication of the economic slowdown now underway (in Australia in general, and NSW in particular) is therefore that there is greater reason for NSW to reconsider the quantum of the wage rise granted by the IRC on 1 May [2000]." · There is a disaster scenario, though the chance of it is slim. 2001 was always going to bring a post-O1ympic hangover, with the end to a bout of office construction in the CBD adding to the expected downturn in demand. However, the speed and severity of the global downturn threatens to push NSW over the edge into something deeper. At the moment that is just a threat, and the forecasts for are little changed on the last. Certainly, the State government appears to be aware of the risks, moving fast to replace the Parramatta to Chatswood rail link with a raft of other projects - though, as with the rail link, few affect spending in 2001. 25 In the body of the document it was said in respect of the outlook for New South Wales that: So NSW looks set to struggle though 2001 before recovering in a better 2002. Output growth may nudge the zero line, but the downturn may be short, and not unexpected given the surge brought by the Olympics. Short term indicators pointing to a moderate slowdown include retail (where a relatively strong pre-GST spend is being followed by a pause rather than a decline); jobs (where despite recent weakness State unemployment has temporarily fallen below 6%, with Sydney below 5%); and wages (which have risen consistently well in recent years, fuelling the retail boom). But construction could turn out to be NSW's Achilles heel. 26 Mr Richardson also gave supplementary oral evidence and was subject to cross-examination.

[59]

This application will seek to place conditions on employers with respect to their use of part-time and casual employees, the use of labour hire and contracting companies. We will seek to provide opportunities to low paid employees to access proper career structures in a Labour Market which makes it more difficult to find regular and secure employment. 34 Mr Christodoulou referred to the AIRC's decision to give the discretion to members of the Commission to waive the requirement for twelve months to have elapsed between wage adjustments allowable under previous Safety Net decisions provided there was consent between the parties and there was no cost to any employer party to the relevant award. He contended that this waiver principle should also be available in the State principles and, in addition, the principles should explicitly make clear that it would be open to any party to run a "special case" should they wish to bring forward the application of previous or current wage case adjustments. Mr Christodoulou submitted that: … it would be neither fair nor just that an award or awards could indefinitely lag behind in wages or delays because of what may have been oversights in the past in making applications to vary them for previous State Wage Case adjustments. It is therefore proper that we place beyond doubt the ability of the Commission to deal with the issue having regard to each case on it's merits. 35 Reference was made to ACCI's submission in the national proceedings that the AIRC should inquire, when an award is varied to include the safety net adjustment, whether that award has appropriate provisions dealing with part-time employment which are consistent with the Family Leave Test Case and Personal Carer's Leave Test Case (Stage 2). Mr Christodoulou contended that with respect to State awards there are various mechanisms available to the parties to consider part-time arrangements as appropriate to each industry. The review of awards pursuant to s19 of the Act in particular, he said, continued to allow the parties to consider part-time work arrangements as appropriate. It was the Labor Council's submission that no action nor determination on the issue of part-time work was necessary as a consequence of the National decision.