Enterprise agreements are showing very pleasing signs of strong wage growth

by Greg Jericho


Strong wage growth from enterprise agreements shows the importance of the government’s reforms.

The latest data from the Fair Work Commission has revealed that enterprise bargaining agreements are beginning to deliver strong wage growth.

Historically enterprise agreements have delivered higher wage growth than other methods, but in the past year, they have lagged behind individual agreements and awards. This is not surprising because enterprise agreements take longer to negotiate because they cover longer periods and also large numbers of employees.

The historically better wage growth was behind the government’s moves last year to improve the enterprise bargaining processes, especially for low-paid workers.

This past fortnight has shown how enterprise bargaining can deliver solid results for workers.

32,166 workers in the banking and finance industry are receiving 4.1% annual wage growth over the next 2.4 years, while 5,395 workers in educational services are part of an average 7.6% annual wage growth for the next year. While this may appear extremely high, it is worth noting that over the past 2 years workers on average have lost 5.5% in the value of their real wages.

The strong wage growth means over the past 3 months the weighted average of wage growth in enterprise agreements has risen to 3.74%. This remains well within the long-term range for wage growth that is consistent with the Reserve Bank’s inflation target of 2% to 3%.

The growth also comes off the back of a decision by the FWC full bench that it can only approve enterprise agreements that include rates of pay, because their absence prevents it determining whether the deal passes the “Better off overall test”.

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