Submission to the 2020 annual wage review

by Jim Stanford

The Centre for Future Work has made a submission to the 2020 annual wage review conducted by the Fair Work Commission. The submission compiles evidence showing that the annual minimum wage adjustments (which flow through into wages specified in the Modern Awards, as well as some enterprise agreements and individual contracts) have played a more important role in recent years in supporting the overall level of wage growth in Australia’s labour market. Without relatively strong minimum wage increases since 2017 (of 3% or higher for three consecutive years), Australian wage growth would still be languishing at all-time record lows of under 2% per year.

In this context, the Centre argued it is vital the Commission proceed with a normal, healthy minimum wage increase for 1 July, 2020, with full flow-through into Award wages. Otherwise wage growth will slump significantly (to an estimated 0.7%, or even lower), heightening the risk of economy-wide deflation.

The submission also provided new analysis on the seasonal pattern of wage growth in Australia’s labour market. In recent years, quarterly wage growth has been twice as strong in the quarter that contains the annual wage award, as in the rest of the year. That attests to the growing structural importance of the annual award in supporting wages, and preventing wage growth from falling even lower.

September Quarterly Wage Premium

The Centre’s submission was reported in the Australian Financial Review, and other media.

Full submission