RBA cut

The Reserve Bank has cut its cash rate by 25 basis points, to 3.5 per cent - its lowest level since November 2009. Today's decision marks the biggest back-to-back monthly reduction since the depth of the global financial crisis.

Residex CEO, John Edwards said he was disappointed with today's outcome and that he believes The Reserve should have held its position.

"The ultimate outcome of the global difficulties which are currently unfolding could well be that the Reserve Bank will need as much ammunition as possible available to it in order to maintain Australian resilience in a potentially very difficult global economy. The need for this is even more acute in a situation where the Federal Government is failing to recognise the potentially very poor timing of its new taxes and impost which are about to come into play.”

Mr. Edwards went on to say that small cuts such as the one annouced today can get overlooked in the consumer’s perception of market conditions and ultimately have little to no impact.

"This can simply work to the negative by further undermining confidence given the very wide-spread press about difficult global finances. The size of today's rate cut is such that a lot of it will probably get lost in the bankers needs to maintain margins and their stability. Funding margins in the current global finance market will be being impacted on as markets look to reduce risk exposure, particularly in Europe.”

Overall, Mr. Edwards said he would have preferred a significant reduction in July if needed when the outcome of the Greek situation is understood and known.

”A single, significant reduction of 0.5 to 0.75 per cent later in the year would have a guaranteed outcome at the consumers 'gate' once the Banks have also balanced their position.”

Wage increases by 2.9%

On Friday 1 June 2012 Fair Work Australia handed down its 2012 annual wage review decision.

– All Modern Award rates of pay are increased by 2.9% effective from the first full pay period commencing on or after (ffppooa) 1 July 2012.

– This increase can be absorbed into any existing over award payments (check the absorption clause in your Modern Awards).

– If you are transitioning rates of pay to the Modern Award, an employee’s new minimum rate is his/her new Modern Award rate plus or minus 40% of the transitional amount.

– Award free casual employees – the default casual loading has increased from 22% to 23% effective from the first full pay period commencing on or after 1 July 2012.
 

Summary of Decision

The 2.9% increase raises the adult National Minimum Wage to $606.40 per week (an increase of $17.10 per week) and to $15.96 per hour (an increase of $0.45 per hour). The National Minimum Wages for employees under training arrangements, juniors and employees with a disability have also been increased by 2.9%.

The minimum weekly payment for employees on the Supported Wage System (currently $75) has not been increased by this decision but can be expected to be increased before the 1 July operative date. Any increase will be advised to members. Adult award rates were also increased by 2.9% at all classification levels, with weekly wages rounded to the nearest $0.10. This decision applies to all employers whose operations or employees are covered by Modern Awards, Enterprise Awards and NAPSAs, all transitional APCSs, and award free employees.

 

Key Features of the Decision

1. Modern Awards

All Modern Award adult rates of pay are increased by 2.9% effective from the first full pay period commencing on or after 1 July 2012.

For many employees, the annual wage review increases coincide with the third transitional step into the Modern Award which also applies from ffppooa 1 July. Subject to the operation of the transitional arrangements, Modern Award classification rates are the minimum award classification rate that can be paid under an award or agreement. In some cases this may require increases ffppooa 1 July to bring an employee’s rate up to the new Modern Award or transitional rate.

Minimum wages for juniors, employees under training arrangements, employees with a disability, piece rates and the National Training Wage

Most junior and apprentice rates are expressed as a percentage of an identified adult classification rate and the annual wage review increase is passed on to juniors in this way. The 2.9% increase applies to all levels of the National Training Wage Schedule which is in most Modern Awards.

Where juniors, apprentices or trainees not under a National Training Wage are phasing into the Modern Award the rules to increase their rates in the pay scale or transitional award should be followed.

Piece rates increase in accordance with the relevant provisions in the Modern Award and pay scale or transitional award.

2. Award-free employees

Award-free adult employees are covered by the National Minimum Wage. This was increased by $17.10 to $606.40 (or $15.96 ph) ffppooa 1 July.

Award-free casuals are covered by the default casual loading unless there is an agreement covering them. The default casual loading will be increased from 22% to 23% ffppooa 1 July.

Special national minimum wages for award/agreement free junior employees

The 2011 Annual Wage Review adopted the junior wage percentage scale in the Miscellaneous Award 2010, applied to the national minimum wage, as the special national minimum wage for award/agreement free junior employees. This scale will continue to apply to these employees.

Special national minimum wages for award/agreement free employees to whom training arrangements apply

The 2011 Annual Wage Review adopted the provisions of the Miscellaneous Award 2010 as the basis for award/agreement free employees to whom training arrangements apply. The apprentice provisions in that award and the provisions of the National Training Wage Schedule were incorporated into the National Minimum Wage order. Adult apprentices should not receive less that the National Minimum Wage for adults.

The wage decision and transitional provisions

Many Modern Awards have transitional provisions phasing-in the award’s classification rates and penalties or loadings. The next phase-in step for penalties and loadings also applies from ffppooa 1 July 2012.

The difference between the pay rate for the employee’s classification in the old pay scale or transitional award and the appropriate classification in the Modern Award is called the “transitional amount”. Similarly, the differences between penalties and loadings (including the casual loading) in the old pay scale, NAPSA or transitional award and the corresponding penalty or loading in the Modern Award are called the “transitional percentage”.

From fppooa 1 July 2012 the third stage of phasing starts in Modern Awards with standard transitional provisions (most Modern Awards).

This means employers must pay the modern award rate (including the 2.9% increase) +/- 40% of the transitional amount (depending on whether your pre-modern award was higher or lower than the modern award rate). Employers must also pay the relevant penalties and loadings +/- the 40% of the relevant transitional percentage.

The decision does not change the size of the transitional amount, just the modern award rate that the transitional amount affects. Nor does the decision alter the percentages of the modern award penalties or loadings. The move from +/- 60% to +/- 40% of the transitional percentages at the same time as the annual wage review increases follows from the Modern Award transitional provisions.

 

Further Information

New pay schedules for each modern award reflecting the increases advised above will be forwarded in due course to members receiving the Chamber’s industrial awards service. This year, for the first time, the pay schedules will be sent via email rather than post unless you have elected not to receive email correspondence.

If you have further questions regarding how this decision affects transitional arrangements under a Modern Award please contact the Workplace Advice Unit.