Minimum wages and their role in the process and incentives to bargain

Wages Australia
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The study is based on four sources of data: (a) a survey of over 11,500 non-public sector organisations, (b) quantitative analysis of over 25,000 enterprise agreements, (c) qualitative analysis of 91 strategically selected agreements; and (d) 20 workplace case studies.

Key findings (indicative)

  • Organisations commonly used a number of pay-setting arrangements for their employees, with individual arrangements (at 65 per cent of organisations) and award based arrangements (52 per cent) the most common.
  • The quantitative analysis of enterprise agreements found that that there may be a positive association between wage increases in enterprise agreements and Annual Wage Review increases. This was particularly the case for industries with higher proportions of agreements paying low wage increases and with a large number of award-reliant employees.
  • The qualitative analysis of agreements identified the importance of distinguishing between agreements that are ‘award-reliant’, ‘slightly above award’ (i.e. pay modest over-awards) and ‘over-award’ (i.e. pay substantial amounts more than the award). 
  • External relativities (i.e. differences in pay for exemplar or reference classifications common across employers) were dispersed among all industries considered. Internal relativities within agreements were very similar to those in their related awards.
  • The case studies found little direct impact of Annual Wage Review decisions on wage outcomes or pay-setting processes – they are best conceived as third order factors shaping both.


While the direct impact of Annual Wage Review decisions was perceived to be limited at the work sites studied, this is not the whole story. The analysis of agreements revealed that there may be positive significant associations between Annual Wage Review increases and agreement content. The workplace cases in general, and the relativities analysis in particular, revealed that awards profoundly shape wage outcomes and the wage determination process.  In particular, the agreement and case study findings highlighted the importance of not conceiving the different pay-setting arrangements in mutually exclusive terms. If the Annual Wage Review increases examined are conceived as being part of an ongoing evolution of the award system, then their impact is better understood as being very significant, primarily because such increases are an integral part of labour standard regime that conditions workplace behaviour and shapes wage outcomes. This appears to be especially the case in those parts of the labour market paying below median wages.

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