Trends in Federal Enterprise Bargaining

Trends in Federal Enterprise Bargaining

September Quarter 2013

TABLE 1: AVERAGE ANNUALISED WAGE INCREASES (AAWIs) PER EMPLOYEE

.
. / June
Quarter
2013 / September
Quarter
2013 / Change in
AAWI % Points
. / % / % / .
Collective agreements approved in the quarter.
All sectors / 3.4 / 3.5 / 0.1
Private sector / 3.5 / 3.5 / 0.0
Public sector / 3.2 / 3.5 / 0.3
All Current Wage Agreements.
All sectors / 3.7 / 3.7 / 0.0
Private sector / 3.8 / 3.8 / 0.0
Public sector / 3.6 / 3.5 / -0.1

Further Information

Trends in Federal Enterprise Bargaining is available online and is currently located at:

The department recommends that Trends in Federal Enterprise Bargaining data be read in conjunction with the Technical Notes (appended to this document), which describe the methodology for the calculation of the data and provide a guide to interpreting the data tables.

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DISCLAIMER

The Commonwealth, its employees, officers and agents do not accept any liability for any action taken in reliance upon or based on or in connection with this document. To the extent legally possible, the Commonwealth, its employees, officers and agents disclaim all liability arising by reason of breach of any duty (including liability for negligence and negligent misstatement) or as a result of any errors or omissions contained in this document.

TABLE OF CONTENTS

Table 1: Average Annualised Wage Increases (AAWIs) per employee

Summary of outcomes reported on in the Trends report

Table 2: Federal Wage Agreements - Formalised in the Quarter

Table 3: Federal Wage Agreements - Current Agreements

Table 4: Wage Agreements, by ANZSIC Division, Formalised in the quarter

Table 5: Wage Agreements, by ANZSIC Division, Current on the last day of the quarter

Table 6: Wage Agreements, by ANZSIC Division, Expiring by quarter

Table 7: Federal Wage Agreements - Lodged in the quarter, by State

Table 8: Federal Wage Agreements - Current in the quarter, by State

Table 9: Federal Wage Agreements – Non-quantifiable, by reason

Table 10: Federal Wage Agreements – Lodged in the quarter, by union coverage

Table 11: Federal Wage Agreements – Current in the quarter, by union coverage

Table 12: Largest Federal Wage Agreements in the quarter

Table 13: Agreements lodged in the quarter, by state and ANZSIC Division

Table 14: Agreements current in the quarter, by state and ANZSIC Division

Trends Technical Notes

Significant Changes in the

September Quarter 2013Trends Report

The calculations for current agreements have been slightly revised for this report.
Historically, current agreement totals included agreements that had wage increases beyond their nominal expiry date. This has now been changed to only include agreements that have not yet passed their nominal expiry date.The reason for making this change is that it more closely accords with the common understanding of the term ‘current’ agreements. This new calculation has also been applied to historical data in this report.

TRENDS IN ENTERPRISE BARGAINING REPORT

SEPTEMBER QUARTER, 2013

SUMMARY

Overall wages growth under federal enterprise agreements[1] – Septemberquarter 2013 (Tables 1 & 2 of the Trends report)

Wages growth under federal agreements for the September quarter 2013has moved upwards slightly since the June quarter 2013.
The average annualised wage increase (AAWI) in the September quarter 2013 was 3.5 per cent2, an increase of 0.1 percentage points on the 3.4percent outcome for the June quarter 2013, but a decrease of 0.1 percentage points from the September quarter 2012.

Comparison between AAWI and ABS wage price index (WPI)

CHART 1: WPI and AAWI – September quarter 2010 to September quarter 2013
[Chart]

Chart 1 shows that the AAWI has remained relatively stable around 3.5 percent since the June quarter 2012, subject to the normal fluctuations caused by the industry mix in each quarter, but the WPI has been in steady decline over the same period.

The comparison between the wage price index and the average annualised wage increase needs to be treated with some caution as they are different measures of wages growth. The wage price index measures the price of wages at a point in time whereas the average annualised wage increase measures wage growth over the life of agreements. Also, the average annualised wage increase can be fairly volatile due to changes in the compositional mix of agreements from one quarter to another while the methodology used by the wage price index removes the effect of changes in the composition of employment.

Note: A weighted AAWI controlling for the above mentioned changes in the compositional mix of agreements from one quarter to another is provided at Note 2 in the footnotes.

AAWI for agreements current as at 30September 2013 (Table 3 of the Trends report)

CHART 2: Current Agreements AAWI – September quarter 2010 to September quarter 2013

[Chart]

Chart 2 shows that the All Industries AAWI for the 23 057 agreements current as at 30 September 2013 (a measure of trend wages growth) has remained steady at 3.7 per cent from the June quarter 2013, but has declined from 3.9 per cent since September 2012.
The reason the AAWI for current agreements is declining, despite the above mentioned relatively stable AAWI since 2012, is because the agreements approved in recent quarters have had, overall, a lower AAWI than the agreements they replace.

Private Sector wages growth – September quarter 2013 (Tables 1, 2 and 4 of the Trends report)

Chart 3 measures the AAWI for private sector agreements approved in the quarter over the last three years. The AAWI for private sector agreements current as at the end of each quarter is provided for comparison.
The chart shows that the AAWI for private sector enterprise agreements approved in the September quarter 2013 was 3.5 per cent, unchanged from the June quarter but down from3.9 per cent in the September quarter 2012.
The private sector AAWI of 3.5 per cent is also lower than the 3.9 per centprivate sector average since 2009 when economic activity in Australia started to recover from some of the effects of the Global Financial Crisis.

CHART 3:Private Sector AAWI for Current and Approved Agreements – September 2010 to September 2013

[Chart]

Agreements which exerted significant influences on the private sector AAWI in the September quarter 2013 included:

The Bunnings Warehouse/Small Format Stores Agreement 2013 (26 226 employees) – 3.1 per cent AAWI;

Hospitality Sector WA United Voice - Crown Perth Enterprise Agreement 2013 (3937 employees) – 3.7 per cent AAWI; and

WesTrac Pty Ltd (Western Australian Service Operations) Enterprise Agreement 2013 (1492 employees) – 2.8 per cent AAWI.

The main industry influences on the private sector AAWI were:

particularly Construction but also Transport and Mining, all with higher than average AAWIsthat exerted some upward pressure on the average wage increase. This was offset by downward pressure from Retail and Health and Social Assistance both with lower than average AAWIs.

Public sector wages growth – September quarter 2013 (Tables 1, 2, 4 and 12 of the Trends report)

The AAWI for public sector agreements approved in the September quarter 2013 was 3.5 per cent, up from 3.2 per cent in the June quarter 2013, and up from 2.8 per cent in the September quarter 2012.
Agreements which exerted significant influences on the public sector AAWI are as follows:

Hume City Council (1517 employees) – 4.0 per cent AAWI;

Casey City Council (1295 employees) – 4.1 per cent AAWI.

State/Territories wages growth – September quarter 2013 (Table 7 of the Trends report)

By state and territory, AAWIs were highest in the Northern Territory at 4.3 per cent and lowest in Tasmaniaat 2.8 per cent.

Wages growth for agreements that cover union/s and agreements with no union/s covered – September quarter 2013 (Table 10 and 11 of the Trends report)4

Agreements approved in the September quarter that covered unions had an AAWI of 3.5 per cent whereas those not covering unions had an AAWI of 3.2 per cent.

Level of agreement making - as at 30September 2013 (Tables 2 & 3 of the Trends report)

Aggregate
There were 23 057 agreements current as at 30 September 2013, covering almost 2.5 million employees. This is slightly down from 30 June 2013 in terms of agreements, however, slightly up in terms of employees covered –23 250 agreements, covering 2.48 million employees, current at 30 June 2013.
The following large agreements (employee numbers in brackets) were approved in the September quarter 2013:
McDonald's Australia Enterprise Agreement 2013 (89704employees);
Victorian Government Schools Agreement 2013 (68926employees);
Australia Post Enterprise Agreement 2013 (31831employees);
Bunnings Warehouse/Small Format Stores Agreement 2013 (26226employees).

Chart 4 graphs the trend in current agreement numbers and employees covered over the last three years, by quarter.

CHART 4: Current Agreements and Employee Coverage – September 2010 to September 2013

[Chart]

Agreement making in the September quarter 2013

2214 agreements were approved in the September quarter 2013, covering over 382 000 employees.

The number of agreements is considerably higher than the average of 1873 agreements per quarter over the last three years, and the employee coverage is also higher than the average of 245 000 employees per quarter.

The increase in agreements is largely due to the approval of over 250 Early Childhood agreements made in the Health and Social Assistance industry, and, in terms of employee coverage, due to some extremely large agreements, such as the McDonald's Australia Enterprise Agreement 2013 (89 704 employees) and the Victorian Government Schools Agreement 2013 (68926employees).

FOOTNOTES

Estimates of average wage increases are calculated for those federal enterprise agreements that provide quantifiable wage increases over the life of the agreement. Enterprise agreements for which average percentage wage increases could not be quantified (e.g. those introducing a new salary structure) are excluded from these estimates.

AAWI data examines only increases to the base rate of pay, and does not take into account allowances and bonus payments that are paid separately from the base wage.

Trend AAWI data:

The AAWI for agreements approved in a quarter can be more volatile because the quarterly pool of agreements, normally around 1800 to 2000, is relatively small and therefore susceptible to the influence of either large agreements or overrepresentation by agreements from whichever industries are in the middle of their bargaining cycles at the time.

Table 1 below summarises varioustrend AAWI measures which indicate the underlining direction of wage growth for agreements for the December quarter 2012 and the first three quarters of 2013. For comparison, the headline quarterly AAWI has been included in the last row of the table.

Table 1: Various trend AAWI measures:

December quarter 2012 / March quarter 2013 / June quarter 2013 / September quarter 2013 / Change in AAWI between last two quarters
Current Agreements AAWI* / 3.8 / 3.8 / 3.7 / 3.7 / 0.0
Weighted AAWI** / 3.5 / 3.6 / 3.5 / 3.6 / 0.1
Rolling Average AAWI / 3.7 / 3.6 / 3.5 / 3.5 / 0.0
Headline quarterly AAWI*** / 3.4 / 3.8 / 3.4 / 3.5 / 0.1

* The current agreements AAWI measures the average of wages increases contained in the 23 057 operating agreements that had not passed their nominal expiry date as at 30 Sept 2013.

** The weighting removes any “overrepresentation” or “underrepresentation” by industries in a particular quarter by having regard to their relative size in the current agreements’ “pool”.

***Headline quarterly AAWI has been included for comparison purposes. It is the average of wages increases contained in the 2214 agreements approved in the September quarter 2013.

Context for the Trendsdata on wages growth in federally registered enterprise agreements:

over one third of all non-managerial employees in the Australian labour market (as measured by the ABS 2012 Employee Earnings and Hours survey) are covered by federal enterprise agreements;
the growth in coverage by federally registered agreements measured by the more recent ABS EEH surveys is shown in the table below.

Table 2: Method of setting pay for non-managerial employees

All non-managerial employees (%) / 2006 / 2008 / 2010 / 2012
Award / 21.0 / 18.1 / 16.4 / 17.8
Collective Agreement (Federally Registered) / 28.5 / 29.0 / 33.1 / 34.3
Collective Agreement (State Registered) / 12.8 / 13.2 / 12.4 / 10.6*
Collective Agreement (Unregistered) / 3.2 / 0.7 / 0.0
Individual Agreement (Registered and unregistered) / 34.5 / 39.1 / 38.0 / 37.3

* The May 2012 ABS EEH Survey does not break up State Registered and Unregistered Collective Agreements

Source for Table: ABS, Employee Earnings and Hours, Cat. No. 6306.0, May 2006, August 2008, May 2010 and May 2012, unpublished data.

An agreement is identified as being “union” where the Fair Work Act decision approving the agreement notes in accordance with s201(2) of the Fair Work Act 2009 that the agreement covers the union(s) which has/have given notice under s183(1) that it/they want the agreement to cover them. It is recognised that this is a proxy measure as the data measures coverage rather than bargaining presence.

TABLE 12: ENTERPRISE AGREEMENTS LODGED IN THE
SEPTEMBER QUARTER 2013 COVERING 2000 OR MORE EMPLOYEES

Agreement ID / Title / Employees / AAWI / ANZSIC / States
AE402596 / McDonald's Australia Enterprise Agreement 2013 / 89704 / *1 / Accommodation and Food Services / Aus
AE402151 / Victorian Government Schools Agreement 2013 / 68926 / *1 / Public Administration and Safety / Vic
AE402555 / Australia Post Enterprise Agreement 2013 / 31831 / 3.2 / Transport, Postal and Warehousing / Aus
AE403775 / Bunnings Warehouse/Small Format Stores Agreement 2013 / 26226 / 3.1 / Retail Trade / Aus
AE403500 / BWS Enterprise Agreement 2013 / 3964 / *1 / Retail Trade / ACT, NSW, NT, SA, Tas, Vic, WA
AE403412 / Hospitality Sector WA United Voice - Crown Perth Enterprise Agreement 2013 / 3937 / 3.7 / Arts and Recreation Services / WA
AE403200 / Best & Less Enterprise Agreement 2013 / 3499 / *2 / Retail Trade / Aus
AE404011 / All Kids Childcare Services Pty Ltd Enterprise Agreement 2013 / 2562 / *3 / Health Care and Social Assistance / Qld
AE403601 / Domain Principal Group (NSW Facilities) Enterprise Agreement 2013 / 2522 / 3.9 / Health Care and Social Assistance / NSW
AE402991 / Western Power and Australian Services Union Enterprise Agreement 2013 / 2456 / 4.0 / Electricity, Gas, Water and Waste Services / WA
AE402283 / UnitingCare Health & QNU Nurses Enterprise Agreement 2012-2015 / 2281 / 3.4 / Health Care and Social Assistance / Qld

Wage increases are inconsistent between different groups of employees
Linked to movements in minimum wages
Wage rates linked to future award wage increases and any future decisions regarding the Australian Government’s Early Years Quality Fund

TRENDS IN FEDERAL ENTERPRISE BARGAINING - TECHNICAL NOTES

The Workplace Agreements Database

Data presented in the Trends in Federal Enterprise Bargaining report (Trends) are drawn from the Workplace Agreements Database (WAD), which is maintained by the Workplace Relations Policy Group of the Department of Employment. The WAD contains information on all known federal enterprise agreements that have operated since the introduction of the Enterprise Bargaining Principle in October 1991 and that have been subsequently provided to the Department of Employment. The WAD covers general details (such as sector, ANZSIC, duration, employees covered), wage details (quantum and timing of increases) and employment conditions.

Agreements included in the WAD

The following agreements are included in the WAD and thus in Trends:

For agreements made under the Fair Work Act 2009 or before the Work Choices amendments to the Workplace Relations Act 2006 (WR Act), those that have been certified by the Australian Industrial Relations Commission (AIRC) or approved by the Fair Work Commission (previously Fair Work Australia).
For agreements made under the Work Choices amendments but before the introduction of the Fairness Test, those that were lodged with the Office of the Employment Advocate (OEA).
For agreements made under the fairness test, those that were lodged with the Workplace Authority. However, agreements were subsequently deleted and do not appear in the data if they ceased to operate because they did not pass the fairness test.
For agreements made under the Transition to Forward with Fairness amendments to the WR Act, union collective and employee collective agreements that were approved by the Workplace Authority. Union greenfields and employer greenfieldswere included when they were lodged, but were deleted if they ceased to operate because they did not pass the no-disadvantagetest.

Wider context for Trends data

Over one third of all non-managerial employees in the Australian labour market (as measured by the ABS 2012 Employee Earnings and Hours survey) are covered by federal enterprise agreements. The table below shows the growth in coverage by federally registered agreements, as measured by the most recent ABS EEH surveys.

* The May 2012 ABS EEH Survey does not breakup State Registered and Unregistered Collective Agreements.

Source for Table: ABS, Employee Earnings and Hours, Cat. No. 6306.0, May 2006, August 2008, May 2010 and May 2012, unpublished data.

Presentation of Trends in Federal Enterprise Bargaining data

A typical row of data in Trends appears as follows:

ALL INDUSTRIES / 1338 / Total number of agreements for a given quarter
AAWI(%) / 3.7 / Average Annualised Wage Increase for the quarter
Duration / 2.6 / Average formal duration per employee for the quarter
Employees ('000) / 143.3 / Estimated total number of employees covered by the number of agreements in the first row

It is important to note that not all agreements contain quantifiable wage increases and in most cases the AAWI is not derived from the total number of agreements shown in the first row or the total number of employees shown in the third row. A more detailed explanation of why this is the case is provided below under ’Average annualised wage increases’.

Employee coverage

Information on the number of employees covered by an agreement is drawn from the information provided to the Fair Work Commission, the AIRC or the Workplace Authority by the employer who lodges the agreement.

In the Trends data, the number of employees covered by agreements is presented as an estimated figure, as employee coverage figures are not always provided when an agreement is lodged.

Where an agreement’s employee coverage is not known and the agreement replaces an earlier agreement where employee coverage is known, the employee coverage of the earlier agreement is used.For those agreements still lacking employee coverage a ‘modified mean’ is used to estimate employee coverage. The modified mean is generated for each industry group by current quarter removing the largest 5% and smallest 5% of agreements, and then calculating the mean of the remainder.