Trends in Federal Enterprise Bargainingmarch Quarter 2014

Trends in Federal Enterprise BargainingMarch Quarter 2014

Contents

Table 1: Average Annualised Wage Increases (AAWIS) Per Employee

Further Information

Trends In Enterprise Bargaining Report March quarter, 2014

Summary

Overall wages growth under federal enterprise agreements – March quarter 2014 (Tables 1 & 2 of the Trends report)

Comparison of AAWI and the ABS Wage Price Index (WPI)

Chart 1: WPI and AAWI – March quarter 2011 to March quarter 2014

AAWI for agreements current as at 31 March 2014 (Table 3 of the Trends report)

Chart 2: Current Agreements AAWI – March quarter 2011 to March quarter 2014

Private Sector wages growth – March quarter 2014 (Tables 1, 2 and 4 of the Trends report)

Chart 3: Private Sector AAWI for Current and Approved Agreements – March 2011 to March 2014

Public sector wages growth – March quarter 2014 (Tables 1, 2, 3 and 12 of the Trends report)

State/Territories wages growth – March quarter 2014 (Table 7 of the Trends report)

Wages growth for agreements that cover union/s and agreements with no union/s covered – March quarter 2014 (Table 10 and 11 of the Trends report)4

Level of agreement making - as at 31 March 2014 (Tables 2 & 3 of the Trends report)

Chart 4: Current Agreements and Employee Coverage – March 2010 to March 2014

Footnotes

Trends in federal enterprise bargaining - technical notes

The Workplace Agreements Database

Agreements included in the WAD

Wider context for Trends data

Presentation of Trends in Federal Enterprise Bargaining data

Employee coverage

Duration of agreements

Average annualised wage increases (AAWI)

Australian and New Zealand Standard Industrial Classification (ANZSIC)

Union Coverage

Non-quantifiable wage increases

Table 1: Average Annualised Wage Increases (AAWIS) Per Employee

Collective agreements approved in the quarter

. / December Quarter2013 (%) / March Quarter 2014 (%) / Change inAAWI % Points
All sectors / 3.5 / 3.7 / 0.2
Private sector / 3.6 / 3.6 / 0.0
Public sector / 3.4 / 3.9 / 0.5

All current wage agreements

.
. / December Quarter 2013 (%) / March Quarter 2014 (%) / Change inAAWI % Points
All sectors / 3.7 / 3.6 / -0.1
Private sector / 3.7 / 3.7 / 0.0
Public sector / 3.4 / 3.5 / 0.1

Further Information

Trends in Federal Enterprise Bargaining is available online 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.

For other queries, please contact

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.

Trends in Enterprise Bargaining ReportMarch quarter, 2014

Summary

Overall wages growth under federal enterprise agreements[1] – March quarter 2014 (Tables 1 & 2 of the Trends report)

Wages growth under federal agreements for the March quarter 2014 increased slightly compared to the December quarter 2013.

The Average Annualised Wage Increase (AAWI) in the March quarter 2014 was 3.7 per cent2, up from 3.5 per cent in the December quarter 2013, but down by 0.2 percentage points from the March quarter 2013.

Comparison of AAWI and the ABS Wage Price Index (WPI)

Chart 1: WPI and AAWI – March quarter 2011 to March quarter 2014

Chart 1 shows that the AAWI has remained relatively stable around 3.5 percent since mid-2012, subject to some fluctuations due to changes in the industry mix from quarter to quarter, but the WPI has been falling steadily over the same period.

A gap opened up in early 2013 between the quarterly AAWI results and the outcomes for the WPI continued in the March quarter 2014. The AAWI was 3.7 per cent while the annual increase in the WPI was 2.6 per cent.
A comparison between the AAWI and WPI outcomes needs to be treated with some caution however because, although AAWI outcomes have been consistently higher than the WPI, the AAWI measure is more volatile and they are different measures of wages growth.

Note: The WPI is a broader measure of wages growth covering all employees. The WPI methodology removes the effect of changes in the composition of the labour market on average hourly rates of pay. On the other hand, the AAWI data in the Trends in Enterprise Bargaining Report does not control for changes in the compositional mix of enterprise agreements from quarter to quarter.

AAWI for agreements current as at 31March 2014 (Table 3 of the Trends report)

Chart 2: Current Agreements AAWI – March quarter 2011 to March quarter 2014

Chart 2 shows that the All Industries AAWI for the 22 425 agreements current as at 31March 2014 (a measure of trend wages growth)has fallen further to 3.6 per cent, continuing the decline from the most recent high in March 2012 of 4.0 per cent.
The AAWI for current agreements is declining due to the new agreements in recent quarters having, overall, a lower AAWI than the agreements they replace.
The AAWI for approved agreements shows a decline from a large spike of 4.4 per cent in the March quarter 2012 to 3.4 per cent in the December Quarter 2012 Also, a steady increase from June 2013 until the latest quarter is shown.

Private Sector wages growth – March quarter 2014 (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 March quarter 2014 was 3.6 per cent, unchanged from the December quarter 2013, and down from the 3.7 per cent recorded in the March quarter 2013.
The private sector AAWI of 3.6 per cent is lower than the 3.9 per cent averagefor the private sector 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 – March 2011 to March 2014

Agreements which, due to their coverage of a large number of employees, exerted significant influences in one direction or the other on the private sector AAWI in the March quarter 2014 included:

Coles Liquor Group Retail Agreement 2014 (4750 employees) –
3.3 per cent AAWI;
Australian Catholic University Staff Enterprise Agreement 2013 - 2017 (4110 employees) – 3.8 per cent AAWI;
Bupa Care Services, NSW Nurses and Midwives’ Association, Australian Nursing and Midwifery Federation (NSW Branch) and Health Services Union NSW Branch, New South Wales Enterprise Agreement 2013 (2775 employees) – 3.7 per cent AAWI; and
Bupa Care Services, Australian Nursing and Midwifery Federation and Health Services Union Victorian Enterprise Agreement 2013 (2711 employees) – 4.0 per cent AAWI.

The main industry influences on the private sector AAWI were:

Health and Community Servicesand Education, with AAWIs of 3.8 per cent and 3.7 per cent. The upward pressure exerted by these two industries was partially offset by a relatively low AAWI of 3.1 per cent for Manufacturing.

Public sector wages growth – March quarter 2014 (Tables 1, 2,3and 12 of the Trends report)

The AAWI for public sector agreements approved in the March quarter 2014 was 3.9 per cent, up from the 3.4 per cent in the December quarter 2013, butsteady on the 3.9 per cent in the March quarter 2013.
The growth in the public sector AAWI during the March quarter 2014 was particularly due to the approval of a range of university agreements, including:

University of Melbourne Enterprise Agreement 2013 (13 886 employees) – 3.9 per cent AAWI; and
University of Sydney Enterprise Agreement 2013-2017 (13 659 employees) – 4.4 per cent AAWI.

State/Territories wages growth – March quarter 2014 (Table 7 of the Trends report)

By state and territory, AAWIs were highest in the Northern Territory at 5.0 per cent and lowest in Tasmaniaat 2.9 per cent.

Wages growth for agreements that cover union/s and agreements with no union/s covered – March quarter 2014(Table 10 and 11 of the Trends report)4

Agreements approved in the March quarter 2014 that formally covered unions had an AAWI of 3.7 per cent whereas those with no unions formally covered had an AAWI of 3.0 per cent. Agreements without unions have, however, had no obvious impact on the overall 3.7 per cent AAWI for the quarter because they are very small and cover relatively few employees.

Level of agreement making - as at 31March 2014(Tables 2 & 3 of the Trends report)

Aggregate
There were 22 425 agreements current as at 31 March 2014, covering around 2.62 million employees. This is down slightly on the total for 31 December 2013 in terms of agreements and up slightly for employees covered. There were 23 239 agreements, covering 2.60 million employees, current as at 31 December 2013.

Chart 4: Current Agreements and Employee Coverage – March 2010 to March 2014

Chart 4 shows that the number of current agreements has remained steadily around 23,000, from March 2011 to March 2014. Also, over the same period the employees the agreements cover remain steadily around 2.5 million, with the largest fluctuation of 200,000
Agreement making in the March quarter 2014

1239 agreements were approved in the March quarter 2014, covering over182 000 employees.
The number of agreements, and employees covered by them, in the March quarter 2014 is lower than the respective averages over the last three years of 1799 agreements per quarter and 234 700 employees per quarter.
Seasonality isone factor behind the lowish level of agreement making in the March quarter 2014. Smaller than average levels of agreement making have occurred in three of the last four March quarters.

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 includes 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.

The table below summarise varioustrend AAWI measures which indicate the underlining direction of wage growth for agreements over the year to the March quarter 2014. For comparison, the headline quarterly AAWI has been included in the last row of the table.

June quarter 2013 / September quarter 2013 / December quarter 2013 / March quarter 2014 / Change in AAWI between last two quarters
Current Agreements AAWI* / 3.7 / 3.7 / 3.7 / 3.6 / -0.1
Weighted AAWI** / 3.5 / 3.6 / 3.6 / 3.6 / 0.0
Rolling Average AAWI / 3.5 / 3.5 / 3.5 / 3.5 / 0.0
Headline quarterly AAWI*** / 3.4 / 3.5 / 3.5 / 3.7 / 0.2

* The current agreements AAWI measures the average of wages increases contained in the 23 236 operating agreements that had not passed their nominal expiry date as at 31Dec 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 1647 agreements approved in the December quarter 2013.

Context for the Trends in Enterprise Agreements data 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 (EEH) survey) are covered by federal enterprise agreements;
the growth in coverage by federally registered agreements measured by the more recent ABS EEH surveys is:

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 / 10.6*
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. Please note that this is not intended to be analysed as a time series.

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.

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 / 1239 / Total number of agreements for a given quarter
AAWI(%) / 3.7 / Average Annualised Wage Increase for the quarter
Duration / 3.1 / Average formal duration per employee for the quarter
Employees ('000) / 182.0 / 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.

As the number of employees covered by an enterprise agreement frequently changes during the life of an agreement, due to workforce fluctuations, the total number of employees covered is not necessarily indicative of the total current coverage of enterprise agreements.

Duration of agreements

‘Formal duration’ is the period from certification to expiry in years.

The ‘effective duration’ of each agreement is used to calculate wage increases rather than formal duration (that is, the period from certification to expiry). The effective duration of a wage agreement is the difference in years between: certification, commencement or the date of the first wage increase (whichever is earliest) and expiry date or the date of the last wage increase (whichever is latest) or termination date (where applicable and only if prior to the later of either the expiry date or the date of the last wage increase). Those few agreements with a formal duration of less than one year are deemed to have an effective duration of 12 months.