In brief - Employers should be aware of industry wage growth trends and prepare an industrial strategy

Many employers are currently experiencing the financial implications of being locked into unproductive and costly enterprise agreements that were negotiated in more profitable times. While the current industrial climate makes it extremely difficult to wind back benefits contained in existing enterprise agreements, employers should benchmark industry wage growth trends during the next round of enterprise bargaining to ensure pay demands from employees and unions are not unrealistic and to attempt to retain a competitive edge.

Recent industry wage growth data reported by Department of Jobs and Small Business

The latest Trends in Federal Enterprise Bargaining report for October-December 2017 has been released by the Department of Jobs and Small Business. The report provides insightful data about average annual wage increases contained in enterprise agreements approved by the Fair Work Commission.

The report shows the average annual wages increase (AAWI) contained in enterprise agreements approved by the Fair Work Commission during the December 2017 quarter.

The largest increases were in the construction industry. Wage increase data from a selection of industries is set out below:

Industry AAWI % in EA % change from last quarter
Construction 4.7% Up 1.6%
Education 2.6% No change
Electricity, Gas, Water and Waste Services 2.9% Up 0.6%
Health and Community Services 2.7% Up 0.2%
Manufacturing 2.5% Up 0.1%
Mining 1.8% Down 0.1%
Retail 2.3% Up 1.2%
Transport, Postal and Warehousing 2.4% Up 0.4%

Employers should prepare an industrial strategy as nominal expiry date of many enterprise agreements approaches

A large number of enterprise agreements are due to nominally expire on 30 June 2018 covering employers and employees in all industries. Once the nominal expiry date passes, employees can take protected industrial action to support or advance claims in respect of an agreement that will cover them.

It is often unwise to put all details of proposed monetary benefits on the negotiation table at the start of enterprise bargaining negotiations. A more strategic approach is to wait until a majority of other terms are agreed with bargaining representatives before reaching agreement on the precise pay increases to be offered over the life of the enterprise agreement.

Data, such as average annual wage increases relevant to the employer's industry, will assist in focusing unions and employee bargaining representatives when claims for pay increases are unrealistic and inconsistent with industry trends.

HR Highlights - IR Insights webinar

Starting in July, our national employment and safety team will be delivering a monthly 30 minute webinar series "HR Highlights - IR Insights" on the following topics:

  • How to ensure your enterprise agreement is approved by the Fair Work Commission
  • Terminating enterprise agreements to remain competitive and sustainable
  • Are union members immune from disciplinary action?
  • How to identify and respond to industrial action on your site
  • Best practice enterprise bargaining tips for employers
Paul O'Halloran
Workplace relations
Colin Biggers & Paisley

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.