Library of Congress

Law Library of Congress

The Library of Congress > Law Library > News & Events > Global Legal Monitor

Australia: Minimum Wage System to Be Examined by Productivity Commission

(Feb. 10, 2015) On January 22, 2015, the Australian Productivity Commission released a series of issues papers related to the workplace relations framework in Australia. (Workplace Relations Framework – Issues Papers, Productivity Commission website (last visited Feb. 5, 2015).) The Australian Treasurer requested that the Productivity Commission undertake a wide-ranging inquiry into the workplace relations framework in December 2014. A final report is expected to be provided to the Government in November 2015. (Workplace Relations Framework – Terms of Reference, Productivity Commission website (Dec. 19, 2014).)

The five papers cover “all the key aspects of the system: its objectives; the safety net provided by minimum wages, awards and the national employment standards; how people bargain in the system, the protections it provides employees, its compliance costs and its institutions.” (Press Release, Productivity Commission, Issues Papers on Workplace Relations (Jan. 22, 2015).)

Issues Paper 2 relates to safety nets, including federal minimum wages. It notes that “[m]inimum wages have been part of the workplace relations system for more than a century, but remain a persistently controversial issue.” (Productivity Commission, Workplace Relations Framework: Safety Nets (Issues Paper 2) (Jan. 2015), Productivity Commission website.)

The Minimum Wage

In accordance with the Fair Work Act 2009 (Cth) (Act No. 28, 2009, COMLAW), the national minimum wage levels are reviewed and set each year by a special panel of the Fair Work Commission, which issues a national minimum wage order. (Annual Wage Reviews, Fair Work Commission website; Minimum Wages, Fair Work Ombudsman website (both last visited Feb. 5, 2015).)

The current standard federal minimum wage is AU$16.87 per hour (about US$13.17), with different rates applying for “younger workers, apprentices and trainees, some people with disabilities, and people whose capabilities are being assessed during a trial period.” (Issues Paper 2, supra, at 1; National Minimum Wage Order 2014, Fair Work Commission website.)

Issues Paper on Minimum Wages and Reactions to It

Issues Paper 2 sets out various theories, opinions, and research related to minimum wages and their impact and invites public submissions on a number of questions, including the rationale for the minimum wage, its effectiveness, and how it is calculated, as well as how many people should receive it and for how long. (Issues Paper 2, supra, at 2–9.)

Employee unions quickly raised concerns about the Productivity Commission’s review of the minimum wage system. The Australian Council of Trade Unions said that it would fight against changes to the minimum wage and “any proposals to introduce American-style labour laws here.” (Stephen Drill, Australian Council of Trade Unions Fears Productivity Commission Inquiry Could Lead to Huge Pay Cuts, HERALD SUN (Jan. 27, 2015).)

The federal Minister for Employment, Eric Abetz, said that the Government would carefully consider the final recommendations of the Productivity Commission on the minimum wage and that whatever it decides is appropriate would be put before voters at the next election in 2016. (Andrew Greene, Unions Vow to Revive WorkChoices Campaign After Workplace Relations Report Flags Review of Minimum Wage, ABC News (updated Jan. 22, 2015).)

The Productivity Commission

The Productivity Commission is an independent advisory body that was established by the Productivity Commission Act 1998 (Cth) (Act No. 14, 1998, COMLAW). Its core function is to “conduct public inquiries at the request of the Australian Government on key policy or regulatory issues bearing on Australia’s economic performance and community wellbeing.” (How We Contribute, Productivity Commission (last visited Feb. 6, 2015).)