70 The Minister submitted evidence and material examining income and expenditure characteristics of low paid workers and households, emphasising the need to maintain a minimum wage at a level to avoid the development of a class of working poor. Similarly, CCER provided a powerful submission on the current economic situation for the low paid employee.
71 Unions NSW provided statements from Ms Haneetha Rothi Bar-Roka, apprentice beautician; Mr Stephen Bali, organiser with the Australian Workers' Union, Greater New South Wales Branch; Ms Helen Marcia Maguire, senior hairdresser; and, Ms Geraldine Elizabeth Smythe, housemaid/waitress to demonstrate the day to day challenges that employees on minimum award wages face. None of these statements were challenged.
Minister for Industrial Relations
72 Turning first to the Minister's material, in relation to household incomes the main points made were that:
· Based on the ABS Household Expenditure Survey 2006, the mean gross household income per week for those in the lowest and second lowest income quintiles is $752 and $1,091 respectively, compared to $1,212 for all households.
· The average weekly expenditure of households in the lowest income quintile is $438.94 and $609.39 for households in the second lowest income quintile. By contrast, expenditure across all households is $947.51. When compared against income based on the minimum wage, currently $504.40, after expenditure on necessities there is little left over for those in the lowest income quintiles.
· The most disadvantaged households are households in the bottom income quintile with no housing equity. Of those in the lowest and second lowest household net worth quintiles, 94.2 per cent and 49.4 per cent respectively rent, compared to 29.4 per cent of all households. In New South Wales the mean household net worth of the lowest quintile is $24,681, compared to $138,990 for the second lowest quintile, and $564,879 for all households.
· Non-homeowners comprised 30 per cent of all Australian households but represented approximately three quarters of households experiencing severe financial difficulties such as going without meals, pawning or selling possessions, or seeking welfare assistance. Such circumstances jeopardise household stability and formation, as well as the well-being of children. Raising the minimum wage helps to ameliorate the pressures low income earners face when meeting essential and emergency costs.
73 On the issue of wage dispersion and income inequality, the Minister submitted:
· The incidence of low pay for wage earners has increased from 14 per cent of the labour force in the mid-1990s to 20 per cent in 2003.
· The incidence of casual and part-time work can in part explain widening distribution of income. Between 1990 and 2000 only one quarter of new jobs created required full-time hours, but of those, virtually all were filled by casual workers. Average earnings from full-time casual and part-time permanent or casual jobs have declined relative to full-time permanent earnings.
· According to the Productivity Commission the majority of wage earners whose main income is earned from non-traditional forms of work (such as casual, labour hire and contract work) are located in the lowest income decile. For most families living below median income, the primary wage earner is employed in non-traditional work.
· Although the award system and annual safety net adjustments have moderated the wage inequality which has grown as a result of fragmentation and decentralisation in the bargaining system, the minimum wage compared with median earnings and Average Weekly Ordinary Time Earnings (AWOTE) for full-time employees has steadily declined. Without regular safety net adjustments which consider the minimum wage as a proportion of earnings generally, this inequity would be significantly exacerbated.
74 In relation to the characteristics of low paid employment, the Minister provided documentary evidence to support the following propositions:
· Award reliant and low paid employment is concentrated in the hospitality, retail and service based industries.
· More than half of workers earning less than $500 a week rely on awards, as do a third of those who earn between $500 and $700 per week.
· Awards are the primary source of determining pay for almost a quarter of all female employees and of all female casual employees almost half are award reliant. By occupation, industry, and employment status, women are most likely to be concentrated in jobs affected by minimum wage regulation.
· More than half the employees in the accommodation, café and restaurant industry (59 per cent) were casuals and that high proportions of casual employees were also found in the agriculture, forestry and fishing (49 per cent), retail trade (45 per cent) and cultural and recreational services (45 per cent) industries. Low skill jobs are associated with industries and occupations in which casual work is prevalent.
· The two lowest skilled occupations employ the greatest proportions of casuals. Of all elementary clerical, sales and service workers 56 per cent were casuals, as were 47 per cent of labourers and related workers. By contrast, the lowest numbers of casual employees were found in the highest skilled occupations of managers (6 per cent) and professionals (13 per cent).
· High rates of churn are associated with highly casualised industries with a low pay profile. Churn between low paid work and unemployment is prevalent, as is churn between non-traditional forms of employment. Low paid employment does not in general provide upward mobility or 'career stepping stones' to better jobs or ongoing employment.
· The Productivity Commission has found that the 'stepping stone model' cannot be applied generally to the groups predominantly employed in low paid and casual jobs, and in particular to women who are married, people with a disability, and those who have spent long periods out of the labour market.
· The concentration of certain types of workers in low paid industries and occupations is indicative of structural factors within the labour market. A reasonable increase in award rates of pay for these disadvantaged workers will help ameliorate their precarious labour market status.
75 The Minister also addressed the needs of vulnerable workers. In that respect, it was submitted that certain labour market groups were disproportionately represented among the low paid. Women, Indigenous, migrant, young, non-unionised workers, those employed in small firms, and workers with a disability were those most likely to be low paid.
76 In relation to female employees it was submitted:
· Many forms of non-standard employment lead to low pay and women are most likely to be employed in these forms: see Buchanan, J and Watson, I 1997, A Profile of Low Wage Employees, acirrt, University of Sydney, pp. 10-11; Productivity Commission, 2006, The role of non-traditional work in the Australian labour market, research paper, May.
· Non-standard forms of employment are strongly associated with industries and occupations with highly feminised workforces and which have a high dependence on awards as the primary means of setting pay.
· In New South Wales 26.8 per cent of part-time workers sought full-time jobs in July 2005. More recent national data show that 61 per cent of underemployed part-time workers were women: see Australian Bureau of Statistics, 2007, Underemployed Workers, September 2006, 6265.0
· Women are more likely than men to trade off wages against conditions which help them meet their disproportionate caring, family and household responsibilities: see Submission to the Inquiry of the Senate Employment, Workplace Relations and Education Committee into the Workplace Relations Amendment (Work Choices) Bill 2005 on behalf of the Governments of New South Wales, Queensland, Western Australia, South Australia, Tasmania, The Australian Capital Territory, The Northern Territory, 9 November 2005, p. 56.
· Almost 11 per cent of underemployed women workers cited unsuitable hours, difficulties in finding child care or other family responsibilities as the main difficulties they had encountered in finding work with more hours: see Australian Bureau of Statistics, 2007, Underemployed Workers, September 2006, 6265.0
77 The Minister submitted in relation to children:
· Young people aged 15-19 years represent a significant section of the labour market in New South Wales, with a participation rate of 59.6 per cent in December 2006, of whom 68 per cent were employed on a part-time basis. It is estimated there are more than 150,000 young workers under the age of 18 years employed in New South Wales.
· Overall, children's employment is concentrated in areas and occupations subject directly to a state award, or indirectly to a 'comparable' state award through the operation of the Industrial Relations (Child Employment) Act 2006. On this basis, almost all working children in New South Wales will benefit from a positive adjustment to minimum wages.
· Young people's employment is concentrated in the retail trade, and accommodation, café and restaurant industries - industries which offer part-time and casual jobs and jobs requiring lower skill levels.
· Young people's concentration in these industries and occupations means they are most likely to be casual and reliant on awards for their conditions and minimum wage increases to improve their pay.
· Young people experience high job insecurity, low and underpaid wages, poor occupational health and safety, unsatisfactory working conditions and problems such as bullying and harassment. In combination, and in consideration of the factors outlined above, young workers are unlikely to hold the bargaining power to achieve conditions which assist them to balance their other responsibilities such as study, to achieve above award outcomes, or to ensure occupational health and safety training has been provided.
· Positive adjustments to award rates of pay support young workers to continue to meet cost of living increases and protect against the need for young workers to increase hours of work to maintain their income in real terms.
78 It was the Minister's submission regarding Indigenous workers that:
· Given economic well-being is largely determined by income and wealth, the difference between the income and wealth of Indigenous and non-Indigenous people is a major indicator of material disadvantage. Based on 2001 Census data, the median gross weekly equivalised income for Indigenous people was $282 compared to $500 for non-Indigenous people.
· By these measures, it is clear Indigenous workers are structurally and socially disadvantaged in competition for employment. Their concentration in unskilled and low-skill work, and their significantly lower incomes compared to the non-Indigenous population suggest weak actual and potential individual bargaining power. A reasonable increase in award rates of pay will be of significant benefit to indigenous workers.
79 On the experience of migrant workers it was submitted:
· The labour market success of migrants is largely dependent on personal attributes such as English proficiency, age, educational qualifications and previous work experience. Australia's migration program has two streams: a skill stream and a family stream. The participation rate of skill stream migrants was 65.5 per cent, compared to 50.5 per cent for family stream migrants.
· Proficiency in English is a significant factor affecting migrants' participation rates. Migrants born in non-English speaking countries who were proficient in English had a participation rate of 66 per cent, compared to migrants with lower levels of English proficiency (37 per cent).
· Family stream migrant and overseas born workers are overrepresented in sectors with low pay and limited security, in particular outwork and contract cleaning. Those most vulnerable are those with low skill levels and limited proficiency in English.
· Many migrant workers are employed in non-unionised workplaces and are consequently deprived of opportunities to secure improved working conditions through enterprise bargaining. Accordingly this group of workers depend on reasonable award adjustments to keep abreast of cost of living increases.
80 On workers with a disability, the Minister submitted as follows:
· The labour market experience of people with a disability is indicative of labour market vulnerability. Just over half of all people with a disability participate in the labour force compared with four in five people without a disability. The employment rate of people with a disability was considerably lower (49 per cent) than those with no reported disability (77 per cent).
· The propensity of people with a disability to be looking for part-time work is higher than for those without a disability. It is important to note that the Productivity Commission last year found that there is no 'stepping stone effect' for people with a disability to ongoing employment from casual, part-time or other non-traditional forms of work.
· On this basis it is evident that marginal and precarious attachment to the workforce is persistent for workers with a disability. These workers face high costs participating in work, including the cost of specialised transport arrangements and the potential loss of income from pension payments. The weak labour market position of this category of workers suggests the benefit of a real wage increase through the award system will positively assist these workers to meet their living and health needs.
CCER
81 CCER submitted that the CPI figure issued by the Australian Bureau of Statistics ('ABS') did not accurately reflect the rise in expenditure by households with low incomes. The groups making up the basket of goods were weighted according to the proportions they represent in the average consumer's expenditure and then added together to create the overall measure of consumer good prices to produce the CPI. This method, it was submitted, masked the real increases in costs to low-income households.
82 CCER submitted:
Some goods and services have experienced a much greater rise in price than others. For example ABS data from 1996-2006 shows that the price of fruit, vegetables and public transport have increased by 112 per cent, 70 per cent and 49 per cent respectively. Over the same time span, audiovisual equipment has decreased by 68 per cent, electronics by 14 per cent, and private cars by 19 per cent. While the CPI provides a certain measure of inflation over this ten year period, the impacts are significantly different for different groups who spend very different proportions of their income on different "baskets" of goods. These differences follow a trend that results in higher inflation for lower income households since the lower figures are associated with high technology products which compete globally with China's production but represent a lower proportion of low income family spending.