As organisations prepare their financial year 2022-2023 budgets, they can anticipate higher wage rises than experienced in recent years, especially for the lower paid or specialised skills. Coupled with big spikes in transport costs and supply chain issues, greater scrutiny by boards on the assumptions behind budget predictions would be prudent.
The Australian Bureau of Statistics has formally reported that The Consumer Price Index (CPI) rose 1.3% in the December quarter alone. Over the twelve months to December, the CPI rose by 3.5%. The most significant price rises were for new dwelling purchase by owner-occupiers (+4.2%) and automotive fuel (+6.6%). Those costs continue to soar. At the same time, the Wage Price Index growth rates continue to recover from the pandemic lows.
Take Away: Employees and unions lean on these statistics to claim wage rises.
The annual wage case and CPI
The Fair Work Commission's 2022 minimum and award wage case will commence with initial submissions on 1 April 2022. The Commission sets a later date for "lodging submissions regarding the National Accounts March quarter 2022". Therefore, CPI and its effect on the living standards of the low paid are important to the outcomes of the annual wage case (balanced with other factors) - as can be seen by the extensive discussion of them in the published decisions.
Take Away: Higher CPI usually means higher award wage adjustments.
The effect of falling unemployment rates
High rates (or risk) of unemployment encourage the Fair Work Commission to moderate the annual wage review outcomes. That risk seems reduced at present with news services this week reporting equal record low unemployment rates. At the same time, skill shortages and a competitive labour market encourage higher wages.
Take Away: Falling unemployment is a two-edged sword acting to raise wages.
Award and minimum wages look likely to rise
The steady and stringent approach taken during the pandemic – and during the prolonged low wage growth era that preceded it – may not fit the emerging circumstances.
Are your finance staff and senior executives aware and realistic about the wage pressures relevant to your key operations?
Are you currently negotiating an enterprise agreement or contemplating your July discretionary wage reviews?
EMA Consulting is at the frontline of its clients’ strategic management of these issues in 2022.If you require more information or want to check your present thinking, now is the time to do it.
Require further information/assistance?
If you require further information or advice, please contact your Consultant.
EMA Consulting is not a law firm and therefore does not provide legal advice or services. The information contained within this document and associated material is general in nature and should not be relied upon. If you require specific advice on a particular matter, we recommend that you contact EMA Consulting on 08 8203 1700. Subject to the matter at hand, your EMAC Consultant may recommend that you obtain formal legal advice. If formal legal advice is required, upon your written instruction EMAC will brief your matter to a legal practitioner for this purpose. The contents of this document and associated materials do not represent legal advice.