Australian Fair Pay Commission

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The Australian Fair Pay Commission (AFPC) is an Australian legislative body created under the Howard Government's "WorkChoices" industrial relations law in 2006 to set the minimum rate of pay for workers. Established to replace the wage setting functions of the Australian Industrial Relations Commission, the AFPC will set and periodically adjust a single adult minimum wage, non-adult minimum wages (such as training wage), minimum wages for award classification levels and casual loadings.^[1]

Australia has a comparatively high minimum wage. For example, a 2005 study found that the Australian federal minimum wage was 58% of the median wage, compared to 45% in Britain and 34% in the USA.^[2] The typical minimum wage worker is in a middle-income household.^[3]

Professor Ian Harper is the inaugural chairman of the AFPC, presiding over 4 commissioners: Mr Hugh Armstrong, Mr Patrick McClure AO, Mr Mike O’Hagan, and Professor Judith Sloan. In a speech to the Centre for Independent Studies titled "Christian Morality and Market Capitalism: Friends or Foes", Harper stated "The market is a means to an end rather than an end in itself" and "The trouble starts when one begins to treat market capitalism itself as a religion".^[4]

The profile of the members of this commission will be different from that of the Australian Industrial Relations Commission which previously had responsibility for determining the above quantities. There will be less representation on behalf of the trade unions and more of an emphasis on determining whether the economic evidence suggests that raising the minimum wage makes the poor better off. Unlike the Australian Industrial Relations Commission, the commission will fund substantial research on the economic effects of raising the minimum wage.

Critics argue that the board lacks independence and scope and that it will reduce the benefits of workers, while supporters believe that it stimulate the economy and in turn improve working conditions.

1 2006 decision
2 Australian trade union reaction to the creation of the AFPC
3 References
4 See also
5 External links

[edit] 2006 decision

On 26 October 2006, the AFPC handed down its first decision. The AFPC's media release stated:

The Australian Fair Pay Commission today announced an increase of $27.36 per week in the standard Federal Minimum Wage and in all Pay Scales up to $700 per week. This covers just over one million Australian workers who rely on the Commission’s decisions for adjustments in their wages. The Commission also awarded an increase of $22.04 per week to all Pay Scales paying $700 per week and above, or more than $36,000 per year, representing another 220,000 workers, about 2% of the workforce.

In hourly terms, the Australian federal minimum wage will increase to $13.47 per hour (for workers on pay scales of less than $700 per week). The decision takes effect on 1 December 2006.

Many commentators were surprised that the AFPC's first decision was so large. For example, the Australian Council of Trade Unions had asked for a minimum wage increase of $30 per week. Despite this, the rise barely kept up with inflation since the previous pay rise handed down by the AIRC in June 2005.

The AFPC has announced that its next decision will be made in mid-2007. The most likely reason for this is to ensure that the timing of the decision does not clash with the 2007 Australian federal election, expected to be held in late-2007.

[edit] Australian trade union reaction to the creation of the AFPC

Australian trade unions view the AFPC as a neo-conservative business-friendly organisation that threatens the basic rights, pay and entitlements of Australian workers. Further, they argue that the FPC will benefit business at the expense of workers. Unions mockingly call the AFPC the Australian Low Pay Commission. Unions view the IRC as independent and wish to keep it as the minimum wage setting body. ACTU's Greg Combet expressed his concern about Professor Harper's ability in an interview with Radio National's Mark Colvin. ^[5]

[edit] References

^ Welcome to the Australian Fair Pay Commission. Australian Fair Pay Commission. Retrieved on 2006-05-11.
^ Leigh, Andrew (2005). "Does raising the minimum wage help the poor?". Discussion Paper No. 501. Australian National University Centre for Economic Policy Research. Retrieved on 2006-05-11.
^ Leigh, Andrew (2005). "Does raising the minimum wage help the poor?". Discussion Paper No. 501. Australian National University Centre for Economic Policy Research. Retrieved on 2006-05-11.
^ Economics academic to head Fair Pay Commission. ABC Radio National. Retrieved on 2006-05-11.
^ Interview with Greg Combet - PM, ABC Radio National, 13 October , 2005