Minimum Wage Regulation in Australia - Case Study Example

Minimum wage regulation Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Lecture Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 16th October, 2012. Introduction Every year the minimum wage in Australia is reviewed to reflect the current economic conditions to reduce hardships for people who earn the least income. The Australian Fair Pay Commission is responsible for these reviews and it considers various factors like inflation, economic growth and GDP. In making its final decision the commission is assisted by the view of various stakeholders. The stakeholders present their views through various submissions to the commission. The commission considers these submissions and draws on them to make the final decision to review the wages. This paper presents the rival submissions of the Australian Council of Trade Unions (ACTU) and Australian Chamber of Commerce and Industry (ACCI). Submissions of the Australian Council of Trade Unions (ACTU) and Australian Chamber of Commerce and Industry (ACCI) about their approach to minimum wage determination In the submissions made by ACTU and ACCI, the approach that they have adopted to ensure that there is minimum wage submission is through establishment of fairness in minimum wages. Australia has been rated to have a relatively high wage rate as compared to other 21 advanced economies in the OECD region. ACCI also states that the net average wage in Australia is 44% compared to these countries. To make the approach of minimum wage using the Fair work Act, there has to be inclusion of both employed and unemployed in the Australian economy as it is through this that there will be the right decisions and rates are made. The approach is of much importance in any consideration that will be made because through this approach, Annual Wage Reviews (AWR) will be compared to see if they give any difference in the rates to be charged. By employing decisions made by the Australian Fair Pay Commission in the 2009-2010 AWR, the ACTU sought to look for ways to promote net safety rather than economic growth. With an increase of minimum wages in 2010 and 2011, it saw a change in the cost of living in the households where $26 in a week lead to class 14 rise its wage to 4.8% and C10 rose to 4.1%.The approach adopted of fair pay will have an economic impact on Australia and will mostly affect the industrial sector and the labor market. According to ACCI, the beginning of 2008 saw a less than 3% growth in the labor market that lead to decreased unemployment that had a negative impact in the labor market due to laborers being lowly paid. At the year end of December 2011, there was a recorded growth of 2.3% due to an increase in wage rate that saw a lot of employment in the mining industries. With a rise in minimum wage and by social inclusion in any decision, there will be growth in economic conditions ranging from the prices of goods and services, wages given to laborers, profits generated in industries and overall productivity in the economy. ACTU reveals that by using the minimum wage approach, there will be reduced inflation though there will be a constant wage growth that will grow at an average pace. There will be increased profits in the national income due to the increase in wages that will cater for the unforeseen financial crises. Due to the growth in profits, there will be more employment of award reliant workers in all industrial sectors and it is through this that Australia will continue to report low rates of unemployment than in any other economy in the Organization for Economic Co-operation and Development (OECD) region. Views reflected in the 2011-2012 Minimum Wage Review decision of Fair Work Australia In terms of productivity, the application of minimum wages lead to an increase by 0.65% in the month of December 2011.Labour productivity in the Australian economy grew by 1.15 in the whole year. Though there was a reported strong growth in the early months of 2011, it was not a sure way that the rest of the year would follow the same trend in terms of productivity. Productivity growth is essential in determination of minimum wage control as it is through this that there is an establishment on the rate of growth that can affect the industries which mostly employ laborers. In the context of annual wage review, the reason for it being reviewed annually is to know the relationship between minimum wage settings and the impact that it can have on industries in an economic year. In terms of Real Unit Labor Cost (RULC), it is evident that its growth is not proportional to the growth in economic productivity which is largely affected by inflation. In December 2011, RULC had dropped to 4% as the rates remained unadjusted even though there was inflation experienced in the early months of 2011.To increase the growth, there should have been an increase in minimum wages that would have seen an increase in productivity. In the industries that employed award- reliant employees, there was a reported growth in their profits by 117% that surprisingly grew much faster than their total wages (ACCI 2012). Due to lack of compensation on the part of employees, there has been a slow growth in productivity across all industries. This has been agitated by the minimum wages that have continued to decline even while comparing to the average wages in Australian economy. Employment has also been affected in the 2011-2012 minimum wage review market because there was a reported slow growth of employment opportunities due to financial crises and due to the softening of the labor market in early 2011, the minimum wage review decision panel had no control neither would they predict the direction in which the minimum wage would be determined (ACTU 2012). As 2011 came to a close, the number of hours worked was increased to 1.6% but they fell almost immediately in the middle months of 2012 due to the increase in employment. The Reserve Bank of Australia predicts that the Gross Domestic Product (GDP) of the country is expected to grow in the long term if there is going to be an increase in employment. Due to the increase in carbon tax, with effect from 1 July 2012, personal income will increase which will increase on overall productivity. There will also be compensation of low income earners due to the increase in prices and not an increase in household incomes. If this is applied the government in its minimal wage while reviewing its annual wages should consider increasing the wages so that they do not leave the consumer with a high burden of catering for taxes. This thereby demonstrates that, an increase in minimum wage will lead to preservation of lowly paid workers to afford good living standards. Decision of Fair Work Australia and the approaches of the ACTU and ACCI Both the ACTU and ACCI in their approaches to fair work treatment have complied with the contemporary work management policies .This is followed by reasons why it is accepted in the Australian economy because it has been agreed that minimum wage reforms are to be changed after every financial year that commences on 1 July. Unless under restricting circumstances, the review should be made and justifications put across as to why there is no review. Reward management requires fairness to be practiced and according to part 2 of the decisions made; persons are entitled to have equal opportunities in the submissions made by both ACTU and ACCI. By involving members of the public in writing the submissions, it is a sure way that fairness in minimum wages will be reached (Philip 2001). By introducing a panel in discussing the wage review, it ensures that all sectors of the economy are catered for (Fair Work Australia 2012). However in my view, the panel selected in reviewing wages should represent both employed and unemployed in the society to fight for equal rights. With an increase in annual wage review for the period 2010 to 2011,there has been an increase in economic productivity that has seen inflation rate decrease and the GDP rise by 1.6% till the last quarter of march 2012.There has been a prediction that the Australian economy is expected to be productive in the period of 2012-2013. In my view, this will only be possible if the output will be proportional to the employment in all sectors of the economy which where there with full employment of resources, there will be a reduction of inflation. Contemporary reward management emphasizes much on ways employees should be compensated and this goes in line with ACTU and ACCI and this is evident on the living standards of lowly paid income earners. The modern award rate and the minimum wage have been proposed by ACTU to be $26 in a week that will see low income earners improve their living standards. In my opinion the chamber should also consider regulating the national minimum wage as it also caters for the Average wage review. Conclusion In Conclusion the ACTU and ACCI should come to a common ground where there is fairness to workers and best consideration for economic growth. However, both groups still continue to have differing opinions on the issue. In the rates charged, there should be common ground whereby there are equal grounds on which minimum wages are to be reviewed. References Australian Chamber of Commerce & Industry, (ACCI) 2012, ACCI Submission: Annual Wage Review 2011–12. Accessed from: http://www.fwa.gov.au/sites/wagereview2012/submissions/ACCI_sub_awr1112.pdf Australian Council of Trade Unions (ACTU) 2012, Australian Council of Trade Unions Submission to the Annual Wage Review 2011-12.Accessed from: http://www.fwa.gov.au/sites/wagereview2012/submissions/ACTU_sub_awr1112.pdf Education Fair Work Australia 2012, Annual Wage Review 2011–12 Decision (C2012/1). Accessed from: http://www.fwa.gov.au/decisionssigned/html/2012fwafb5000.html Management", Editors Redman, T. & Wilkinson, A, Pearson Education, pp.98-127. ©Pearson Philip, L 2001, 'Chapter 4 - Reward Management', In "Contemporary Human Resource Read More