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Speaker 1: My name is Lily Maddon and I'm a proud Arunda

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Speaker 1: Bungelung Calcuttin woman from Gadigl Country. The Daily oz acknowledges

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Speaker 1: that this podcast is recorded on the lands of the

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Speaker 1: Gadighl people and pays respect to all Aboriginal and Torres

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Speaker 1: Strait Island and nations. We pay our respects to the

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Speaker 1: first peoples of these countries, both past and present.

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Speaker 2: Good morning and welcome to the Daily os It's Thursday,

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Speaker 2: the eighth of June.

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Speaker 3: I'm Zara, I'm Tom.

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Speaker 2: Good evening. Nearly three million workers are set to benefit

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Speaker 2: from a historic pay decision.

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Speaker 3: You might have heard the news recently that minimum wages

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Speaker 3: are set to rise, the biggest increase in the minimum

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Speaker 3: wage ever. The minimum wage rising seems like a simple idea,

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Speaker 3: but did you know that there isn't one minimum wage

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Speaker 3: but hundreds.

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Speaker 2: In today's deep dive, Tom is going to explain to

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Speaker 2: both me and you how the minimum wage works and

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Speaker 2: how the increase might impact you. But first let's do

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Speaker 2: that headlines.

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Speaker 3: Economic activity in Australia grew by zero point two percent

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Speaker 3: in the first three months of twenty twenty three. That's

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Speaker 3: the lowest result since the Delta lockdowns in the second

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Speaker 3: half of twenty twenty one. When you measure it per person,

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Speaker 3: it went backwards by zero point two percent, raising fears

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Speaker 3: of a recession.

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Speaker 2: Fraser Island, on Queensland's south coast will officially become known

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Speaker 2: as Gary, the name used by traditional owners. Gary is

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Speaker 2: the world's largest sand island and is World's Heritage Listed.

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Speaker 2: More than nineteen hectares of land has also been returned

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Speaker 2: to traditional owners.

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Speaker 3: The United Nations has warned of grave and far reaching

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Speaker 3: consequences following the collapse of a dam wall on the

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Speaker 3: Dinnipro River. Russia and Ukraine have both blamed each other

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Speaker 3: for the collapse, which forced thousands in southern Ukraine to

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Speaker 3: flee amid flooding concerns and concerns for the Zappari your

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Speaker 3: nuclear plant.

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Speaker 2: And the good news and Pasacoglu will become the first

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Speaker 2: Australian to coach in the English Premier League and Melburnian

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Speaker 2: signed a four year contract to become the coach of

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Speaker 2: Tottenham Hotspur, a soccer team based in London. Hello Sarah Tom,

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Speaker 2: pleasure to be in the same room as you for once.

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Speaker 3: Yeah, every time we do this intro we have to

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Speaker 3: do it several times.

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Speaker 2: It's always incredibly awkward.

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Speaker 3: I'm glad I made it through. I can't say hello

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Speaker 3: naturally to each other when we're recording, but it is.

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Speaker 3: It's nice to see you, and I'm here today talking

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Speaker 3: about wages, which I know you're very excited about. Thrilled.

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Speaker 3: So to set the scene a bit, last week, there

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Speaker 3: was this headline the minimum wages increased, and we wrote

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Speaker 3: about it for TDA. It's a pretty simple story. You

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Speaker 3: get your headline number five point seventy five percent, you

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Speaker 3: put in the you know when it takes effect July one.

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Speaker 3: You know, we noted that it wasn't as much as

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Speaker 3: what the unions wanted, it was more than what the

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Speaker 3: business groups want when we post it, and you know,

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Speaker 3: I think people move on pretty quickly from the headline itself.

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Speaker 3: But when it comes to the issue of wages more broadly,

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Speaker 3: we know it's something obviously that our audience cares about,

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Speaker 3: and that in the context of a cost of living crisis,

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Speaker 3: wages are such an important issue that we're very focused on.

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Speaker 3: But I guess I've been reflecting on the fact that

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Speaker 3: we don't often delve into the weeds of how do

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Speaker 3: wages work, and so that's kind of what I want

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Speaker 3: to do today.

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Speaker 2: I know that this is a genuine interest of yours

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Speaker 2: because I've been sitting across from you all week while you've.

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Speaker 3: Gone huh, I've been learning a lot.

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Speaker 2: Yeah, it's been nice to watch you go through those realizations.

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Speaker 2: But we need to just take a step back first.

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Speaker 2: So can you just explain to everyone how wages actually

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Speaker 2: work here in Australia.

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Speaker 3: Yeah, So to start with, we've got really two systems

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Speaker 3: for determining wages, the award system and the agreement system.

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Speaker 3: So the awards system is a system of minimum wages. Really,

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Speaker 3: So here's the first interesting fact. We talk about the

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Speaker 3: minimum wage increasing, but Australia actually doesn't have just one

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Speaker 3: minimum wage. We have hundreds for different types of work,

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Speaker 3: and that's the award system. Now, historically that was pretty

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Speaker 3: much the whole system. So you go back kind of

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Speaker 3: almost one hundred years ago and pretty much everybody's wages

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Speaker 3: were determined by a government tribunal that would set out

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Speaker 3: that the minimum paying conditions. Is that not the case today?

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Speaker 3: Not the case today? So today it's about one in

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Speaker 3: five workers who are still covered by an award. So

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Speaker 3: that's a lot. That's millions of people. But four and

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Speaker 3: five workers are covered by I guess a newer system,

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Speaker 3: the agreements system. And agreements, as the name suggests, are

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Speaker 3: agreed between an employer and employees, and so you can

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Speaker 3: do that as an individual. I'm pretty sure I'm on

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Speaker 3: an individual agreement with Uzara as my employ or. You

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Speaker 3: can do it as a collective where you know, all

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Speaker 3: the employees together kind of negotiate with their employer overpaying additions,

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Speaker 3: and there are rules and there's a role for government.

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Speaker 3: There's a lot more to say about the details of

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Speaker 3: each of these two systems, but for now, I think

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Speaker 3: it's important to focus on these two buckets. One in

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Speaker 3: five people covered by awards, four and five people covered

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Speaker 3: by agreements, and which bucket you're in, as we're going

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Speaker 3: to see, makes a really significant difference to your wage.

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Speaker 2: Okay, so let's start with awards before we go into agreements.

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Speaker 2: Talk me through them.

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Speaker 3: So, the awards system, as I have suggested, is wages

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Speaker 3: minimum wages for different types of work set by the government,

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Speaker 3: not politicians, but an independent government body, the Fair Work Commission.

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Speaker 3: And there are all sorts of different types of people

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Speaker 3: who are covered by the awards system. But the big

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Speaker 3: three groups today that are still covered by awards are retail, hospitality,

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Speaker 3: and a lot of care jobs. Basically, so three really

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Speaker 3: important sectors where a lot of people I suspect a

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Speaker 3: lot of people in the audience will be covered by

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Speaker 3: young people by an award. Absolutely a lot of young people,

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Speaker 3: a lot of women covered by the award system. And

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Speaker 3: the Fair Work Commission meets once a year to update

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Speaker 3: all of these wages at once. And I think it's

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Speaker 3: important to say here. You know, I'm saying the word minimum,

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Speaker 3: but it's not just kind of about a bare minimum.

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Speaker 3: The awards actually going to a lot of detail and

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Speaker 3: they set out a minimum or basically a standard rate

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Speaker 3: of pay for all sorts of different levels of work.

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Speaker 3: The award will also specify what you get paid if

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Speaker 3: you do over time, if you do you know, weekend work,

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Speaker 3: if you're on call. All these details are included in

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Speaker 3: the awards so that you know they are quite detailed.

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Speaker 3: If you take fast food workers, for example, they get

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Speaker 3: a little bit of extra pay to reflect uniform cleaning costs.

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Speaker 3: They get extra pay if they have to work in

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Speaker 3: a freezer for extended periods of time, there are all

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Speaker 3: sorts of again you know, levels of detail that's set

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Speaker 3: out how people who are covered by awards get paid.

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Speaker 3: And then when the Fair Work Commission meets once a

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Speaker 3: year and it decides on its increase, that applies across

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Speaker 3: the board. So this five point seventy five percent pay

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Speaker 3: rise that the Fair Work Commission decided on last week,

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Speaker 3: that applies not just to people on kind of you know,

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Speaker 3: the absolute lowest wage in the country. It applies to

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Speaker 3: anyone who is covered by an award. They will get

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Speaker 3: that five point seventy five percent. And so you know, again,

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Speaker 3: I guess that makes that decision a really significant one.

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Speaker 2: Okay, So let's put aside awards for a second. The

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Speaker 2: other bucket there was agreements. What do we need to

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Speaker 2: know about them?

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Speaker 3: So agreements are basically negotiations between employers and employees. It's

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Speaker 3: a system that we've started shifting towards in the last

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Speaker 3: twenty or thirty years. And the rationale is it's supposed

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Speaker 3: to be. I guess it's you know, less involvement by

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Speaker 3: government and a little bit more specific to the unique

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Speaker 3: needs of a particular company, a particular line of work,

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Speaker 3: a particular group of employees, and you know, agreements can

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Speaker 3: be individualized, I suppose in that way, but it's not

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Speaker 3: a free for all. So agreements are governed by a

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Speaker 3: pretty strict set of rules and the Fair Work Commission,

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Speaker 3: you know, it sets awards, but it has a big

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Speaker 3: role to play in agreements as well. The Fair Work

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Speaker 3: Commission in this case is basically the umpire for enforcing

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Speaker 3: all of those rules, and if an employer and employees

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Speaker 3: can't agree, the Fair Work Commission can kind of step

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Speaker 3: in and make it determinations. So it's quite a complex

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Speaker 3: thing to work out, and the rules themselves are I

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Speaker 3: think it's fair to say, really controversial. It's a really

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Speaker 3: hot button political debate between unions and businesses and between

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Speaker 3: the labor and liberal parties as to exactly what these

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Speaker 3: rules should be.

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Speaker 2: And so you've mentioned there that most employees are governed

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Speaker 2: by agreements awards today. Does that mean that one's better

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Speaker 2: than the other?

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Speaker 3: Well, I think certainly the system is set up to

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Speaker 3: encourage agreements, and certainly people who are on agreements, well

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Speaker 3: they get paid a lot more. That's probably the first

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Speaker 3: place to start. So when we look at kind of

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Speaker 3: the average wage for someone on an award versus the

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Speaker 3: average wage for someone covered by an agreement, it's huge difference.

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Speaker 3: So the average for an award is before tax, I

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Speaker 3: think eight hundred and forty nine dollars a week, but

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Speaker 3: for people who are on agreements, it's more like fifteen hundred.

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Speaker 3: So we're talking about all almost twice as much that

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Speaker 3: people on agreements get paid. There are a few reasons

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Speaker 3: for that. I guess we go back to you know

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Speaker 3: what I identified before that it's hospitality, it's retail that

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Speaker 3: make up a lot of the awards. You know, these

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Speaker 3: tend to be entry level jobs, often helped by young people.

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Speaker 3: But also in part it is because the agreement system

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Speaker 3: is generally designed to be able to facilitate higher wages.

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Speaker 3: So one of the reasons for that is that one

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Speaker 3: of the rules that any agreement has to follow is

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Speaker 3: it has to pass something called the better off overall test,

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Speaker 3: which is a test that basically says the agreement has

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Speaker 3: to be better for every employee than the relevant award

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Speaker 3: would be. So if you're in the restaurant business and

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Speaker 3: you're trying to negotiate your own agreement, you have to

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Speaker 3: make sure basically that every one of your employees gets

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Speaker 3: more under your agreement than they would if they were

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Speaker 3: on the award, so that, I guess kind of bakes

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Speaker 3: in this idea that people on agreements should essentially get

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Speaker 3: paid more. So Yeah, I mean absolutely, I think given

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Speaker 3: the choice, you would probably want to be on an

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Speaker 3: agreement is a choice, But no, it's not exactly. And

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Speaker 3: it remains the case that millions of people are relying

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Speaker 3: on the awards, and I think that that's just a

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Speaker 3: really interesting thing to note that, Like, you know, in

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Speaker 3: both of these contexts, the government really matters, but I

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Speaker 3: think people probably wouldn't necessarily appreciate that almost three million

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Speaker 3: of predominantly low paid workers essentially have their wages set

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Speaker 3: by a government body. Like I think that's something when

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Speaker 3: we talk about wages and why wages aren't going up,

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Speaker 3: it is kind of interesting to note what a significant

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Speaker 3: role the plays, and not just plays, but plays for

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Speaker 3: some of the people who will often struggle the most

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Speaker 3: with their cost of living.

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Speaker 2: And I mean to go back to the government's announcement

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Speaker 2: that they made recently about these pay rises, what do

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Speaker 2: we expect the impact of these rises to be on

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Speaker 2: people's lives?

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Speaker 3: Yeah, really significant, and I think we should probably, to

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Speaker 3: be honest, paying a lot more attention. I should probably

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Speaker 3: be paying a lot more attention to the Fair Work Commission,

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Speaker 3: I think than we all do. You know, we talk

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Speaker 3: a lot about the Reserve Bank in the context of

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Speaker 3: cost of living. I can't count the number of times

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Speaker 3: I must have been on the podcast talking whether as

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Speaker 3: a bank and interest rates, and they did that again

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Speaker 3: this week. And you know that gets rightly a lot

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Speaker 3: of attention. But this decision by a sort of a

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Speaker 3: symbolar government body, you could argue, has just a significant

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Speaker 3: an impact on the cost of living crisis, on people's

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Speaker 3: standard of living. The Fair Work Commission is enormously important

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Speaker 3: both for awards and agreements, and its decisions really matter.

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Speaker 3: You know, we talk a lot about wage theft, people

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Speaker 3: being underpaid. We talk a lot about contract workers and

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Speaker 3: people in insecure work, all of these issues about the

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Speaker 3: workforce and the amount that people get paid and how

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Speaker 3: that factors into their cost of living. I think you

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Speaker 3: can understand them a lot better with a little bit

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Speaker 3: more of this understanding of awards and agreements, and I

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Speaker 3: guess how the sausage is made.

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Speaker 2: Thanks for joining us on the daily. If you learned

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Speaker 2: something from today's episode. Don't forget to hit subscribe, so

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Speaker 2: there's a TVA episode waiting for you every weekday morning.

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Speaker 3: We'll be back

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Speaker 2: Again tomorrow morning, but until then, have a brilliant day,