1

Queensland Industrial Relations Commission

Industrial Relations Act 1999

s.287 - Application for a General Ruling

(Matter No.B2014/28/30)

THE AUSTRALIAN WORKERS’ UNION OF EMPLOYEES, QUEENSLAND

‘STATE WAGE CASE 2014’

SUBMISSIONS

[1] Introduction:

[1.1] It the submission of the Australian Workers’ Union of Employees, Queensland (AWU) that

Queensland’s award-reliant employees should be granted a wage increase consistent with the

principles of fairness, economic advancement and social justice. The AWU is of the strong submits

that the decline in the relative earnings of low-paid workers must be prevented by the Queensland

Industrial Relations Commission (‘QIRC’) awarding a fair increase in minimum wages consistent

with the following submission.

The Claim:

[1.2] The AWU application seeks the following:

1. A $22.30 wage adjustment for workers employed at award classification rates equivalent to or

below the Engineering Award – State 2002 C10 classification;

2. A 3.0 percent adjustment for workers employed at award classification rates above the

Engineering Award – State 2002 C10 classification;

3. A 3.0 percent allowance adjustment for award employees;

4. A $22.30 adjustment to the Queensland Minimum Wage as it applies to all employees.

[1.3] For the purposes of this application, the wage adjustments outlined above will hereby be referred

in these submissions as ‘the claim’. The claim seeks to deliver a flat-dollar increase to workers who

are employed at rates of pay equivalent to or lower than C10 of the Engineering Award – State 2002

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as well as percentage increase to workers employed at rates of pay higher than C10 of the Engineering

Award – State 2002.

[1.4] The AWU submits that there is sufficient capacity for the Queensland economy to accommodate

these wage increases, given its good standing for other significant reasons which will be outlined in

these submissions.

[1.5] The AWU submits that should the Queensland Industrial Relations Commission (QIRC) awards

this wage increase, it will assist employees who are disadvantaged when it comes to the bargaining

process with employers; it will assist in addressing Queensland’s gender-pay inequalities and will

assist in maintaining wages that are relative to community standards which will ensure that low paid

award-reliant workers are able to acquire fair and reasonable living standards.

[1.6] The AWU submits that the claims for increases to award rates and to the Queensland Minimum

Wage are fair, reasonable and appropriate in light of the current state of the Australian and

Queensland economies.

[2] Legislative Requirements:

[2.1] In hearing this application, the QIRC is required to provide a framework for economic prosperity

and social justice by ensuring that awards comply with the objectives of the Act, as described in s3 of

the Industrial Relations Act 1999 (Qld), providing a framework for industrial relations that supports

economic prosperity and social justice by—

(a) providing for rights and responsibilities that ensure economic advancement and social

justice for all employees and employers; and

(b) providing for an effective and efficient economy, with strong economic growth, high

employment, employment security, improved living standards, low inflation and national and

international competitiveness; and

(c) preventing and eliminating discrimination in employment; and

(d) ensuring equal remuneration for men and women employees for work of equal or

comparable value; and

(e) helping balance work and family life; and

(f) promoting the effective and efficient operation of enterprises and industries; and

(g) ensuring wages and employment conditions provide fair standards in relation to living

standards prevailing in the community; and

(h) promoting participation in industrial relations by employees and employers; and

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(i) encouraging responsible representation of employees and employers by democratically run

organisations and associations; and

(k) meeting the needs of emerging labour markets and work patterns; and

(l) promoting and facilitating jobs growth, skills acquisition and vocational training through

apprenticeships, traineeships and labour market programs; and

(m) providing for effective, responsive and accessible support for negotiations and resolution

of industrial disputes; and

(n) assisting in giving effect to Australia’s international obligations in relation to labour

standards; and

(p) ensuring that, when wages and employment conditions are determined by arbitration, the

following are taken into account—

(i) for a matter involving the public sector—the financial position of the State and the relevant

public sector entity, and the State’s fiscal strategy;

(ii) for another matter—the employer’s financial position.

[2.2] Therefore, the AWU requests that the Full Bench of the QIRC give genuine consideration to the

claim, in order to ensure that the award rates of pay accurately reflect the current living standards of

citizens within Queensland.

General Ruling under the Act:

[2.3] Since 1997, the administrative process for awarding wage and allowance increases has taken

place by way of General Ruling, pursuant to section 287 of the Act. Section 287(2) states that the

QIRC ‘must ensure a general ruling about a Queensland minimum wage for all employees is made at

least once each calendar year’. 1

[2.4] The operative date for such increases has generally been 1 September. The AWU seeks a

continuation of this operative date.

[3] Capacity of the Queensland Jurisdiction:

[3.1] The State jurisdiction consists of approximately:

250, 000 State Government employees

With approximately 1, 000 directly being affected by this State Wage Case

decision

1 Industrial Relations Act 1999 , s. 287(2)

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37, 000 local government employees

Less than 2, 000 are award-reliant

1250 Parents and Citizen’s Associations

Which employ 3, 000 to 4, 000 employees which are covered by the State system

and are award-reliant.

[4] Economic Conditions:

[4.1] The Australian economy remains strong with continuing economic growth. The Australian

economy has grown by 3.5 percent, seasonally adjusted, over the year to the March quarter 2014, with

1.1 percent of seasonally adjusted growth occurring in the most recent quarter. This is the highest rise

since June 2012.2 The increase in GDP has also surpassed the previous Australian Budget forecast of

2.75 percent increase in GDP, indicating emerging strength in the economy.3 Real trend GDP grew by

0.8 percent in the March quarter for an annual increase of 3.2 percent from March quarter 2013.4 The

Australian economy strengthened in the latter half of 2013, with the RBA noting that “the economy

looking like it grew at close to its long-run average pace over this period.”5 The Reserve Bank has

indicated that more recent economic indicators are consistent with some improvement in the overall

pace of growth.6 During the March quarter 2014, seasonally adjusted real net national disposable

income rose by 1.3 percent, for growth of 2.2 percent since March quarter 2013.7 Leading industry

contributors to growth over the year up to the March quarter 2014 were mining (1.1 percentage

points), finance (0.6 percentage points), construction (0.4 percentage points) and health care (0.3

percentage points.)8 Seasonally adjusted exports of goods and services increased by 10.4 percent

from March quarter 2013 to March quarter 2013, including a 4.8 percent increase from December

quarter 2013 to to March quarter 2014.. This quarterly increase included seasonally adjusted exports

of goods increasing by 5.3percent, with rural exports up 7.3 percent and non–rural exports up 5.4

percent.9 Seasonally adjusted imports decreased by 1.4 percent from December quarter 2013 to March

quarter 2014, and 4.2 percent from March quarter 2013 to March quarter 2014.10

2 Australian Bureau of Statistics, 5206.0 – Australian National Accounts: National Income, Expenditure and

Product, March 2014 3Ibid; Australian Government, Budget 2013-14, Budget Paper No. 2: Economic Outlook, 3.

4 Ibid.

5 Reserve Bank of Australia, Statement of Monetary Policy – May 2014 .

6 Ibid.

7Australian Bureau of Statistics, 5206.0 – Australian National Accounts: National Income, Expenditure and

Product, March 2014 8Ibid.

9 Ibid.

10 Ibid.

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[4.2] Inflation was within the Reserve Bank’s target band in 2013-14, rising by 2.9 percent from

March quarter 2013 to March quarter 2014, including a 0.6 percent increase from December quarter

2014.11

This was a slight rise on the 2013 rise of 2.9 percent to the December quarter 2013. Brisbane’s

CPI’s grew at 3.1 percent, the second highest rate of any capital city, from March quarter 2013 to

March quarter 2014.

[4.3] In relation to Compensation of Employees (COE), trend total COE rose 0.8 percent, reflecting a

rise of 0.7 percent in average earnings per employee.12

Trend COE represented 53.0 percent of Total

Factor Income, continuing an ongoing fall in recent years.13

Market sector Gross value added (GVA)

per hour worked (in trend terms) rose 0.8 percent in the quarter and 2.4 percent through the year,

reflecting an ongoing trend of increasing productivity over 11 successive quarters. Over the past five

years to the March 2014 quarter, GVA measures of labour productivity rose by 12.9 percent.14

[4.4] The AWU contends and reiterates its position from the 2013 state wage case, that the QIRC

should be concerned about the failure of real wages to keep up with increases in productivity, driving

effective income down. Aside from concerns of equity and legislative objectives to maintain a

reasonable standard of living for workers and their facilities, real wage decline creates significant

issues for consumer spending. Real income growth is the engine of household spending. Sustainable

increases in spending require household income growth. This also reduces the likelihood of increasing

levels of private debt effecting consumer spending, rather than consumers relying on borrowing or

running down savings.

[4.5] In its most recent monetary statement, the RBA noted that housing turnover and prices had

continually increased, with forward-looking indicators of dwelling investment remaining at high

levels.15

In addition, the RBA interest rate, as at 3 June 2014, was 2.5 per cent16

, having remained

unchanged since a 25 point drop (0.25 percent) from 2.75 percent August 2013.17

The RBA has

forecast further stability to continue to encourage demand and consumption while keeping inflation

within the target band.

[4.6] Queensland workers are under significant financial pressure as the cost of living continues to

press hard on working families and households. Brisbane’s headline consumer price index (CPI)

11

Australian Bureau of Statistics, 6401.0 – Consumer Price Index, Australia, March 2014. 12

Australian Bureau of Statistics, Australian National Accounts: National Income, Expenditure and Product

5206.0 March 2014. 13

Ibid. 14

Ibid. 15

Reserve Bank of Australia, Statement on Monetary Policy – May 2014, 30. 16

Reserve Bank of Australia, Statement by Glenn Stevens, Govenor: Monetary Policy Division, 3/06/2014

<http://www.rba.gov.au/media-releases/2014/mr-14-10.html>; Reserve Bank of Australia, Statement by Glenn

Stevens, Govenor: Monetary Policy Division, 6/08/2013 < http://www.rba.gov.au/media-releases/2013/mr-13-

15.html> 17

Reserve Bank of Australia, Case Rate Target (2012) http://www.rba.gov.au/statistics/cash-rate.html

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increased 0.6 percent in March quarter 2014, part of a 3.1 percent annual increase.18

Australian CPI

rose 2.9 percent from March quarter 2013 to March quarter 2014.19

Brisbane recorded the second-

highest increase of any Australian capital city over this period.20

Other fixed and essential costs have

bitten into wage earners budgets, including government charges and utility prices. Low paid workers

are especially sensitive to these changes. Council rates have continued to be set well above CPI levels

across most Councils Queensland for the 2014-15 financial year. For example, Brisbane City Council

has increased average rates by 3.85 percent21

, Ipswich City Council has increased average rates by 4.4

percent22

and Sunshine Coast Regional Council has increased average rates by 5 percent in 2014-15.23

Soaring electricity prices in recent years have also driven up essential costs for Queenslanders. The

Queensland Competition Authority has recently determined that electricity retailers may increase the

standard domestic electricity tariff by 13.6 percent in 2014-15, or $191.24

Water prices have also

continued to increase well above CPI and wage increases.25

Transport costs have also continued to rise for workers and their families, impacting on discretionary

spending and workers ability to stimulate local economies. In its May 2014 fuel prices report, the

RACQ noted that unleaded petrol was more expensive compared to Melbourne and Sydney. The

RACQ further noted that falls in the value of the Australian dollar in June could place upward

pressure on the oil price, and subsequently the retail fuel price, in Australia.26

The Federal

Government’s decision to index petrol excise in the 2014-15 Federal Budget will also increase fuel

costs from July 1 2014.27

The fall in the Australian dollar is also likely to increase the cost of imported

goods, including fuel.28

Public transport charges have continued to increase. In 2014, Translink public

18

Australian Bureau of Statistics, 6401.0 - Consumer Price Index, Australia, Mar 2014 19

Ibid. 20

Queensland Treasury and Trade, Consumer Price Index, March quarter 2014.

http://www.qgso.qld.gov.au/products/briefs/cpi/cpi-201403.pdf 21

Brisbane City Council, Annual plan and budget 2014-15, 139. 22

Ipswich City Council, ‘Budget focuses on building for the future.’Media release (26 June 2014) http://www.ipswich.qld.gov.au/about_council/media/view_release/?id=4625&action=viewMediaRelease 23

Sunshine Coast Regional Council, ‘Budget builds confidence for a stronger community.’ Media release (26 June 2014). http://www.sunshinecoast.qld.gov.au/sitePage.cfm?code=council-news&stid=0&id=14211 24

Queensland Competition Authority, ‘Regulated energy prices for 2014-15 released’

http://www.qca.org.au/Media-Centre/Media-Releases/Media-Releases/2014/May/Regulated-electricity-prices-

for-2014%E2%80%9315-released 25

For example, see Kim Stephens, ‘Brisbane water bills to increase by $72 a year’ Brisbane Times (March 27, 2014) http://www.brisbanetimes.com.au/queensland/brisbane-water-bills-to-increase-72-a-year-20140327-35l1p.html. 26

RACQ, Monthly Fuel Price Report – May 2014, 5.

http://www.racq.com.au/__data/assets/pdf_file/0006/156984/Monthly_Fuel_Price_Report_-_May_2014.pdf 27

Richard Webb/Australian Parliament House Library, ‘Budget Review 2014-15: Reintroduction of fuel excise

indexation’

http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/BudgetR

eview201415/FuelExcise 28

Queensland Government, Budget 2014-15, Budget Paper No. 2 – Economic Strategy and Outlook, 40.

7

transport fares increased by 7.5 percent, following a similar increase of 7.5 percent in 2013.29

Queensland’s public transport fare structure continues to be one of the most expensive in Australia.30

These rising cost pressures will have a disproportionately higher impact on lower paid workers. An

increase in the minimum wage of quantum suggested by this claim will help to reduce the real and

disproportionate impact of cost of living pressures on Queensland workers directly and indirectly

affected by this decision.

Conclusion on economic conditions:

[4.7] The Australian and Queensland economies continue to fare well compared to international

counterparts, with stable monetary policy containing inflationary pressures and encouraging increased

consumption.

[4.8] Wage pressures on business have been moderate in face of increasing CPI and other measures of

cost of living for working Australians. However, underlying softness in the labour market is

contributing to restrained household income, and thus reduced spending.31

Award-reliant employees

depend on a wage increase to maintain the real value of wages to offset significant increases in

housing prices, interest repayments and rent payments as this can be a significant financial strain and

pressure for many working families. The AWU submits that the Australian and Queensland

economies are sufficiently robust to support the claim of the AWU. Thus, the AWU submits that it is

confident that our claim is appropriate and reasonable in light of the prevailing economic conditions.

[5] Australia’s Economic Outlook:

[5.1] The Australian economy is predicted is to grow by 2.5 percent in 2014-15 before returning to

near trend growth of 3 percent in 2016-16.32

The Reserve Bank has forecast similar year-average GDP

growth of 3 percent for 2014, 2.25 to 3.25 percent for 2015 and 2.5 to 4 percent for 2015/16.33

This is

only slightly below trend pace for the Australian economy. The RBA has forecast that overall growth

29

Translink, Translink fares and ticketing 2014, http://translink.com.au/content/translink-fares-and-ticketing-2014-0 30

For example, see Kim Stephens, ‘Fare hike to make Brisbane Australia’s most expensive’ Brisbane Times 3 January 2014 http://www.brisbanetimes.com.au/queensland/translink-fare-hike-to-make-brisbane-australias-most-expensive-20140103-30910.html; Maria Hatzakis, ‘SE Qld Public Transport among most expensive’ 7.30 Queensland http://www.abc.net.au/news/2013-03-16/se-qld-public-transport-among-the-most-expensive/4577694. 31

Australian Government, Budget Paper No. 1 (2014), Statement 2: Economic outlook, 9. 32

Australian Government, Budget Paper No. 1 (2014), Statement 2: Economic outlook, 5. 33

Reserve Bank of Australia, Statement on Monetary Policy – May 2014, 63.

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of Australia’s major trading partners is expected to continue around its long-run average over 2014

and 2015.34

The 2014 Federal Budget forecast increased household consumption of 3.25 percent, an

upward revision of the 2013-14 Federal Mid Year Economic Financial Outlook. The Commonwealth

Treasury has forecast dwelling investment to grow by 7.5 percent and 5.5 percent in 2015-16, part of

an improved outlook for the housing and construction sector.35

Household consumption was forecast

to grow by 3 percent in 2014-15 and 3.25 percent in 2015-16, part of the ongoing recovery of the

household spending since the Global Financial Crisis.36

The RBA’s most recent economic outlook

outlined the nature of this growth, finding that these improvements were bolstered by increases in

export of natural resources and better conditions in non-mining sectors of the economy. A recent

business expectations survey from leading firm Dun & Bradstreet found employment expectations for

the September quarter 2014 had lifted, along with a fourth consecutive increase in surveyed

businesses plans for capital expansion.37

[5.2] Both imports and exports are forecast to increase which are consistent with strengthening

domestic activity and boosting economic growth.38

The RBA has forecast that the terms of trade will

increase again by mid-2016 to be around 50 percent of the 2000s long run average, including a

doubling of the value of LNG exports as the industry moves fully into its productive phase.39

Resources exports are forecast to continually grow, with volumes rising by 8 percent in 2014-15 and

9.5 percent in 2015-16.40

Non-commodity goods exports are forecast to increase by 3 percent in 2014-

15 and 3.5 percent in 2015-16, with 3 percent growth for services exports in 2014-15 and 2015-16.41

Overall exports are forecast to grow by 5.5 percent in 2014-15 and 7 percent in 2015-16.42

Inflation is

expected to remain low. The Commonwealth Treasury and Reserve Bank of Australia both forecast

inflation to remain consistent and with the RBA’s inflation target. Treasury is forecasting the

Consumer Price Index (CPI) will be 2.25 per cent in 2014–15 and 2.5 per cent in 2015–16.43

[6] Queensland’s Economic Outlook:

34

Reserve Bank of Australia, Statement of Monetary Policy – May 2014, 61. 35

Australian Government, Budget Paper No. 1 (2014), Statement 2: Economic outlook, 9. 36

Ibid, 10. 37

Dun & Bradstreet, 2014, Business issues and expectations – latest numbers,

http://dnb.com.au/Header/News/Business_issues_and_expectations/indexdl_10886.aspx 38

Ibid 39

Reserve Bank of Australia, Statement of Monetary Policy – May 2014, 61. 40

Australian Government, Budget Paper No. 1 (2014), Statement 2: Economic outlook, 12. 41

Ibid, 13. 42

Ibid. 43

Robert Dolamore/Australian Parliament House Library, Budget Review 2014-15: Overview

http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/BudgetR

eview201415/Overview

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[6.1] The Queensland economy continues to grow with significant growth forecast to continue in the

near future. Economic growth in Queensland in 2011-12 and 2012-13 was driven by the

unprecedented levels of business investment associated with major LNG and coal projects.44

In 2012-

13, growth was driven by an increase in household consumption and exports.45

The most recent state

Budget described economic growth in 2013-14 is expected to be underpinned by household

consumption growth, a recovery in dwelling investment and a significant contribution from net

exports.46

The Queensland economy is expected to be the fastest growing of all the states from next

year, with Gross State Product (GSP) forecast to rise 3 percent in 2014-15 and 6 percent in 2015-16,

stronger than the 2.5 percent and 3 percent growth forecast nationally over the same period.47

The

forecast 6 percent rise in economic growth in 2015-16 represents an 11-year high for Queensland.48

Queensland export levels are expected to remain solid due to high levels of coal exports, with a

significant boost in exports occurring through 2015-16 with the completion of LNG projects.49

The

volume of overseas goods exports is expected to grow by 9.25 percent in 2013-14, and to continue

onward over the following years. The ramp up in LNG production is expected to underpin a surge in

overseas exports of 22.5percent in 2015-16 which, combined with an improved domestic sector, is

forecast to boost economic growth to an 11-year high of 6 percent.50

[6.2] Household consumption growth increased to 0.9 percent in March quarter 2014, following 0.5

percent growth in the previous quarter, to be 2.8 percent higher over the year.51

This suggests that

households continue to spend and stimulate the economy. The Queensland Treasury Corporation

predicts household consumption to consistently contribute to Queensland’s economic growth in

coming years, along with a rise in trade sector contributions.52

Housing construction will make a

significant contribution to state growth in 2014, with lending growth remaining reasonable.53

The

Australian dollar has also dropped from historic highs in 2013 to more sustainable levels, with the

RBA noting that some investors are underestimating the likelihood of a further fall in the Australian

dollar.54

This positive economic outlook supports the AWU’s claim, which is to ensure that a

reasonable standard of living is maintained for Queenslander’s lowest paid award-reliant employees.

44

Queensland Government, Budget 2014-15, Budget Paper No. 2 – Economic Strategy and Outlook, 30. 45

Ibid. 46

Ibid. 47

Queensland Government, Budget 2014-15, Budget Paper No. 2 – Economic Strategy and Outlook, 25. 48

Ibid, 30. 49

Commonwealth Bank of Australia, State and Territory Perspectives June 2014,

https://www.commbank.com.au/content/dam/commbank/corporate/research/publications/economics/cba-state-

perspectives/2014/270614-State_Territory.pdf 50

Queensland Government, Budget 2014-15, Budget Paper No. 2 – Economic Strategy and Outlook, 25. 51

Queensland Treasury and Trade, ABS State Details, March Quarter 2014 52

Queensland Treasury Corporation, QTC Investor Booklet, 23. 53

Commonwealth Bank of Australia, State & Territory Perspectives, June 2014, 1. 54

Reserve Bank of Australia, Economic Update, 3 July 2014 http://www.rba.gov.au/speeches/2014/sp-gov-

030714.html.

10

[6.3] As the Queensland Government is an employer within the jurisdiction, it is submitted that the

increase sought by this claim will have little impact, as an increase in base wage rates will be

absorbed by certified agreements which are in place. Increasing the relevant rates as envisaged by this

claim will assist in the making of certified agreements, and thus assist in the legislative objective of

promoting employer and employee participation in industrial relations.

[6.4] In light of these conditions, the AWU submits that the Australian economy is more than capable

of accommodating our claim. The AWU also encourages the full bench to consider a medium to long-

term view of economic prospects when considering our claim as against all other relevant

considerations and circumstances. The AWU submits that the medium and long term economic

outlook for the Australian economy is positive, coupled with export of Queensland’s natural

resources set to increase. Furthermore, the evidently strong forecast for Australia’s economic growth

and the fact that the fundamentals of the Australian economy remain strong, with solid growth,

internationally and historically low unemployment and well-contained inflation for the future supports

our claim.

[7] The Labour Market

National Employment

[7.1] The national labour market remains firm with positive indicators for 2014 and beyond.

Employment growth picked up in the early months of 2014, following subdued growth over 2013.55

In

trend terms, employment increased by 13,100 persons to 11,573,100 persons in May 2014.56

This

represents a 0.9 percent annual increase in trend employment since May 2013.57

Seasonally adjusted

employment grew by 0.9 percent from May 2013 to May 2014.58

The trend unemployment rate

remains stable at 5.9 percent, and 5.8 percent when seasonally adjusted. The participation rate also

appears to have stabilised. In the March quarter 2014, the Private sector index rose by 0.7 percent and

the Public sector index rose at a faster rate of 0.8 percent. The All sectors quarterly rise was 0.7

percent. The Private sector through the year rose to the March quarter 2014 of 2.6 percent was smaller

than the Public sector rise of 2.9 percent. Through the year, all sectors rose 2.6 percent.

[7.2] Other job indicators are also rising. The ANZ Job Advertising series, a nationally recognised

indicator of labour market conditions, found that job ads rose consecutively for four months from

55

Reserve Bank of Australia, Statement on Monetary Policy – May 2014, 2. 56

Australian Bureau of Statistics, 6202.0 – Labour Force, Australia, May 2014. 57

Ibid. 58

Ibid.

11

January through April at an annualised rate of nearly 30 percent.59

This was “broadly consistent with

other measures of job advertisements/vacancies” that had improved or stabilised since mid-2013.60

Job ads fell in May 2014 in connection with perceived concerns about the Federal budget, although

the trend figure recorded moderate 0.5 percent growth.61

SEEK, Australia’s largest employment

market place, described new job ads as sitting 7.6 percent higher than in May 2013, despite a

moderate fall following the 2014-15 Federal Budget.62

Queensland Employment

[7.3] Queensland’s employment prospects remain positive for the next financial year.

The number of persons employed in Queensland is growing. In trend terms, the total number of

employed persons in Queensland increased by 0.3 percent in May 2014, the fourth consecutive month

of strong 0.3 percent growth. Trend employment has risen for 13 consecutive months. Queensland’s

trend employment increased by 60,400 persons or 2.6 percent, the strongest gain of any state and

more than half of national employment growth.63

The trend participation rate continued to edge higher

to 66.4 percent in May 2014, an increase of 0.7 percentage points. This signifies an increasing number

of Queenslanders are entering the workforce, in recognition of improving economic conditions. The

total number of employed persons increased by 1.0 percent from the March Quarter 2013 to March

quarter 2014, against a national increase of 0.8 percent.64

Seasonally adjusted unemployment dropped

from 6.3 percent to 6.2 percent from April to May 2014, while trend unemployment increased slightly

from 6.2 percent to 6.3 percent.65

This is forecast to increase further from 2014-15 due to

improvements in dwelling investment, greater population growth, and growth in labour intensive

industries as part of broader shifts in the state and national economy.66

Conclusion

[7.4] The Australian labour market has showed signs of improvement after slower than average

growth over 2013. Australia has continued to display ongoing growth in employment while

59

Ibid. 60

Ibid. 61

ANZ Bank, ‘Job advertising declines sharply in May.’

http://www.media.anz.com/phoenix.zhtml?c=248677&p=irol-jobad&nyo=0. 62

SEEK, ‘Job market shows resilience following Budget announcement’, 24 June 2014,

http://www.seek.com.au/investor/news-media. 63

Queensland Treasury and Trade, ABS Labour Force, May 2014. 64

Queensland Treasury and Trade, Employment by industry, March quarter 2014. 65

Australian Bureau of Statistics, 6202.0 – Labour Force, Australia, May 2014. 66

Queensland Government, Budget 2014-15, Budget Paper No. 2 – Economic Strategy and Outlook, 39.

12

maintaining levels of unemployment much lower than many other developed countries. The

Queensland labour market has improved throughout the year, with only slight movements in the

unemployment rates. The current healthy state of the labour market supports the AWU’s claim.

[8] The Labour Market Forecast

National Labour Market

Employment

[8.1] Employment growth has remained robust against other economic conditions and international

comparators over recent years, with greater growth forecast for the medium to longer term. In the

recent Federal Budget, The Commonwealth Treasury forecast national employment to have grown by

0.75 percent in 2013-14, with improvement to 1.5 percent per annum over the next two financial

years.67

However, the most recent open source five year predictions from the Commonwealth

Department of Employment also predict medium-term increases in employment. The November 2013

projections predict employment to grow by 838,100 over the five years to November 2018, including

growth in 16 of 19 broad industry groupings.68

Unemployment

[8.2] Despite ongoing global weakness and uncertainty, Australia’s unemployment rate has remained

relatively low and stable and is well below rates in most advanced economies.69

As of May 2014, the

unemployment rate remained steady at 5.9 percent, or 5.8 percent when seasonally adjusted.70

In the

2014-15 Budget, the Commonwealth Treasury forecasts unemployment rate to increase to 6.25

percent by the June quarter of 2015 and to remain at this rate until the end of 2015-16.71

[8.3] While unemployment has grown, Australia remains in a positive position to create new jobs and

drive productivity as the economy shifts away from the mining boom of recent years. As the Federal

Treasury has noted,

67

Australian Government, Budget Paper No. 1 (2014), Statement 2: Economic outlook, 5. 68

FWCBC[250] Department of Education, Industry Employment Projections 2014 Report, 1 <

http://lmip.gov.au/default.aspx?LMIP/EmploymentProjections> 69

OECD, Harmonised unemployment rates, http://www.oecd-ilibrary.org/economics/harmonised-

unemployment-rates_2074384x-table6 70

ABS, 6202.0 - Labour Force, Australia, May 2014, < http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0> 71

Australian Government, Budget Paper No. 1 2014-15, 5.

13

‘despite the geographic concentration of resources activity and employment, the aggregate

unemployment rate has remained low and the dispersion of regional unemployment rates has

continued to decline since the start of the mining boom. The continued fall in the regional

dispersion of unemployment over this period shows that, despite the uneven pattern of growth

in the economy and across regions the benefits of the strong economy are being spread

broadly across Australia.’72

Queensland’s Labour Market

Employment Growth

[8.4] Queensland’s labour market is forecast to grow at a higher rate than the nation from 2014-15

onward. In its forecast for the 2014-15 Queensland Budget, Queensland Treasury and Trade has

forecast an increase in employment in Queensland of 2 percent for 2014-15, building on a 1.5 percent

estimated growth in 2012-13. Employment is forecast to further increase to 2.25 percent in 2015-16

and 2.5 percent in 2016-17. Queensland Treasury Corporation has also forecast improved

employment growth with unemployment levels to continue to remain well below the long term

average.73

Unemployment

[8.5] Queensland’s seasonally adjusted unemployment was estimated to decrease from 6.3 percent to

6.2 percent from April to May 2014. Queensland and Treasury and Trade have forecast an estimated

unemployment rate of 6 percent for 2013-14, lower than other estimates. This is predicted to stay

steady at 6 percent over the 2014-15 financial year, before decreasing by 0.25 percent annually 2015-

16 to 2017-18, where it is projected to drop to 5.25 percent.74

Conclusion

[8.6] Both the Australian and Queensland labour markets remain relatively steady despite a slight

increase in unemployment in recent years. These factors support the AWU’s claim for a moderate and

reasonable increase to the Queensland Minimum Wage and award rates of pay.

72

Australian Government, Budget Paper No. 1 (2014), Statement 2: Economic outlook, 6. 73

Queensland Treasury Corporation, QTC Investor Booklet, 24. 74

74Queensland Government, Budget 2014-15, Budget Paper No. 2 – Economic Strategy and Outlook, 31.

14

[10] Decisions of other 2014 Wage Cases in other Jurisdictions

Fair Work Australia

[9.1] On 4 June 2014, Fair Work Australia handed down its Annual Wage Review 2013-14 decision.75

[9.2] This decision has effect from the first full pay-period on or after 1 July 2014.76

Fair Work

Australia increased the national minimum wage to $640.90 per week, or $16.87 per hour.77

This

represents an increase to the national minimum wage (NMW) of $18.70 per week.78

Modern award

minimum wages are increased by 3 percent, with commensurate increases in hourly rates on basis of a

38 hour week.79

[9.3] In reaching its decision, Fair Work Australia primarily had regard to Australia’s economic

climate and its economic outlook. In awarding the increase to award rates of pay, Fair Work Australia

reasoned that:

wages growth has increased only moderately since already low levels, noting that:

o AWOTE recorded its lowest annual growth in a decade to the December quarter 201380

;

o all award rates of pay have fallen relative to measures of median and average earnings;

The NMW has fallen from 47 per cent to 43.3 per cent of AWOTE and from 59.8 per cent

to 55.8 per cent of average weekly earnings (AWE) over the five year period from the

December quarter 2008 to the December quarter 2013;81

o the real value of award minimum wages and the NMW would decline if no adjustment

were awarded. The CPI increased by 2.9 per cent over the past year;82

Inflation accelerated over the year to the March quarter 2014, whether measured by the Consumer

Price Index (CPI) or Living Cost Index (LCI) for employee households;83

domestic economic growth is expected to be sound as it transitions to broader growth;84

unemployment rate is expected to increase slightly over the coming quarters and the participation

rate is expected to remain historically high.85

75

Fair Work Australia, [2014] FWCFB 3500. 76

Ibid at [622]. 77

Ibid. 78

Ibid. 79

Ibid, [619.] 80

Ibid, [49]. 81

Ibid, [56]. 82

Ibid at [50]. 83

Ibid at [25]. 84

Ibid at [23].

15

[9.4] In its decision, Fair Work Australia noted that:

‘…relative living standards and the needs of the low paid are among the matters we are required

to take into account in the fixation of minimum wages…;’86

‘Over the past decade, all award rates of pay have fallen relative to measures of median and

average earnings;’87

‘There has been almost no growth in the real value of award rates over a period when other

employees have had substantial wage increases in circumstances in which the economic

environment has been sound. The deterioration in the relative living standards of award-reliant

workers; the needs of the low paid; the recent widespread improvement in labour productivity

growth; the historically low levels of real unit labour costs; and the absence, in aggregate, of cost

pressures from the labour market are all factors favouring a real increase in minimum wages;’88

and

“a modest increase in minimum wages has a very small, or even zero, effect on employment.”89

Western Australia

[9.5] The Western Australia Industrial Relations Commission (WAIRC) handed down its decision on

11 June 2014.90

The decision will take effect from the first full pay period after 1 July 2014.91

[9.6] The WAIRC increased the minimum wage to $665.90 per week. This represents an increase of

$20.00 per week to the WA minimum wage.92

Conclusion

[9.7] Fair Work Australia’s Annual Wage Review 2013-14 decision indicated that the Australian

economy is capable of sustaining an increase to wages of $16.87 per week. The Western Australia

Industrial Relations Commission determined that the economy of Western Australia could sustain a

$20.00 increase per week. The Queensland economy along with the Western Australian economy is

the cornerstone of the strong Australian economy, on the back of the mining and resource boom. On

the basis that the Queensland economy is one of the better performing state economies and is part of

the strong Australian economy it is well placed to absorb the claim. Queensland has a positive

85

Ibid at [28]. 86

Ibid, [53]. 87

Ibid at [338]. 88

Ibid at [559]. 89

Annual Wage Review 2013–14, FWCFB 3500 at [43]. 90

2014 State Wage Order Pursuant to Section 50A of the Act 2014 WAIRC 00471. 91

Ibid at 20, 92

Ibid at 20.

16

economic outlook in line with the Australian national outlook, particularly in the medium term. These

forecasts for the Queensland economy and comparator states indicate that there is capacity for the

payment of the claim and necessity for its introduction.

[10] Nature of the claim

[10.1] In this section, the AWU sets out the rationale behind the percentage increase sought for

workers employed at award classification rates above the Engineering Award – State 2002 C10

Classification. The AWU seeks a flat rate increase and a percentage increase, similar to the outcome

awarded by the QIRC in the 2011, 2012 and 2013 state wage case decisions.93

[10.2] Flat rate increases erode the relative gap between the classification levels contained in awards.

The decision to award both a flat and relative increase in the 2011, 2012 and 2013 state wage cases

has assisted in closing this relativities gap. Awarding both a flat and percentage increase on the

grounds laid out in this claim will further reduce this relativities gap.94

Conclusion

[10.3] Awarding both a percentage increase and a flat rate increase will assist in redressing existing

disparities in wage classifications. It will go some way to providing salary justice for workers,

ensuring their salary continues to increase in real terms as they progress through the salary scale that

is applicable to their employment.

[11] Conclusion

[11.1] The AWU application seeks a $22.30 per week increase to award rates of pay equivalent to and

below the C10 classification level of the Engineering Award State 2002. In addition, the application

seeks a 3.0 percent increase to allowances. The increases sought will provide an increase for low paid

workers and address the issue of relativities in classification scales.

[11.2] The AWU believes that this claim is modest and reasonable in the circumstances. The increase

is sought to restore the real value of the minimum wage and to ensure fair wage standard so that

award-reliant workers do not fall further behind other workers. The time is right for a considered

increase to maintain social justice and share the gains from a relatively strong economy. By seeking

the claim, the AWU application is designed to benefit those greatest in need.

93

Queensland Industrial Relations Commission, State Wage Case 2013; Queensland Industrial Relations

Commission, State Wage Case 2012; Queensland Industrial Relations Commission, State Wage Case 2011. 94

Ibid.

17

[11.3] The following reasons justify the claim:

The decision will have a minimal impact on Queensland’s employers, as a result of the

limited size of the State jurisdiction and the low degree of award dependency within this

jurisdiction;

Both the Australia and Queensland economies are able to handle this moderate increase. The

Australian economy continues to lead the global economic recovery and the Queensland

economy is one of the better performing state economies;

The short to mid-term economic forecast for Australia and Queensland describe ongoing

growth despite transition in underlying economic drivers;

The Queensland labour market has showed ongoing resilience and strength, despite a slight

decline in the national labour market ;

The claim will help to maintain minimum wages relative to community standards, to ensure

fair living standards for Queensland’s low paid, award-reliant workers;

The claim will redress, to a certain extent, the wage differential for employees who do not

benefit from collective bargaining; and

The claim will go some way to redressing the persistent gender pay inequity that exists in

Queensland where the majority of low-paid workers are women.

[11.4] A decision to award the claim to Queensland’s lowest paid, award-reliant employees is wholly

justified and reasonable in the circumstances. The increase will help promote workforce participation

and social inclusion. The best way to encourage people to work, we submit, is to provide decent work

at decent rates of pay.

[11.5] The AWU calls on the Commission to hand down a two-pronged decision which grants the

claim that has been tailored specifically to meet the needs of low-paid workers, by combining the

dependability and certainty of a flat-rate increase with the consolidation and stabilisation of

relativities within salary classification structures that flow from a percentage increase. The claim is

economically appropriate, sustainable and affordable, and will increase the living standards of the low

paid workers and assist them to meet their needs in the current economic climate.