This is an AI Group podcast. In this podcast, we'll be discussing the most significant workplace relations issues of the month, April 2022. The four members only report is available on our website at AIgroup.com.au. It's in the news section under reports and policies.
On that page, select workplace relations with me today to discuss the key aspects of this paper. This is reported Steven Smith. I'm Steven, AI Group's head of national workplace relations policy. And I'm telling you about my AI Group's head of corporate affairs.
We've got folks on three issues today. The first one is the federal election policies. We've got midway through the campaign, two and a half weeks ago. We're going to talk about the annual wage review and finally the aged care work value case, which has got some flow on risk on claims on many other industries if unions succeed.
First up is the Labor Party has announced some major industrial relations changes that intends to introduce a collective, particularly around the topic of insecure work. AI Group's expressed opposition to a number of these policies and for a variety of reasons. Perhaps we could just go through a few of them. The first one is about including job security as a new object in the Fair Work Act.
What are the issues around that? It's quite unclear what this would actually mean. Perhaps it's not going to result in the biggest change to the way that the commission and others deal with the issues. But this whole topic of job security flows through most of Labor's announced policies.
There are significant concerns amongst a lot of employers about what Labor has in mind around casual employees, around independent contractors, Labor hire and so on. Because it's not really been an issue that's come up during the campaign, but there's a lot on the record. Isn't there particularly around this idea that the insecure work is dominating the workforce at the moment, which I think has been exposed as a myth? Well, this is one of the big issues is when you look at this argument that there is an increase in job insecurity.
It's not pointed out by the facts. If you look at casual employment, for more than 20 years, casual employment has been around 20% of the workforce. It took a big dip at the start of COVID because so many casuals were put off. But it's now come back up again, but it's still only 19% of the workforce.
So it's just not correct that there is a so-called increased casualisation of the workforce. The number of casuals today as a proportion of the workforce is less than it was 20 years ago. And yet there's policies such as redefining casual employee to restrict ongoing regular casual employment should label in government. What big impacts of that?
Well, this is a major concern because as members would be aware, the whole casual employment debate over recent years has been very problematic, very risky. The matter has been comprehensively settled through the High Court case in Workpack versus Rosato, and through the amendments that were made to the Fair Work Act last year to define a casual employee. The High Court has effectively endorsed that statutory definition by deciding that the common law definition is consistent with that definition in the Fair Work Act. And the Labor Party have a policy of disturbing the definition of casual employee.
We don't know exactly what that would look like, but the issue has been comprehensively settled and ideally there will be no changes in that area. And there's also Labor higher firms in the target under Labor policies about same job, same pay. There's some big implications for that too. Yes, and again the facts are important here.
The level of Labor higher employment is 1.1% of the workforce on the latest ABS stats, and that has gone down in recent years. So there just has not been an increase in Labor higher workers. But Labor's policy would require client companies to engage Labor higher businesses who are employing their workers on conditions and rates that match the rates that the client is paying. Now this disturbs not only a lot of existing arrangements for Labor higher companies and their employees, but the definition of Labor higher in the bill that Labor introduced during the current term of government is easily done.
And it would include a lot of contracting arrangements that go far beyond any reasonable notion of what Labor higher even is. Okay, well that's certainly one to watch. There's a range of others. We don't need to go through them all, but there's public reporting of the gender pay gap by large companies.
There's 10 days paid domestic and family violence leave, which that's one I think we've supported by the government. If I'm right there. Yes, that's right. We've supported a publicly funded domestic violence leave scheme at the level of the National Minimum wage, but not a requirement that the government would be able to do that.
Not a requirement that employers, small and large, would have to pay for this entitlement. Okay, other Labor policies making wage theft a crime, giving the Fair Work Commission the power of set minimum paying conditions for gig workers. There's a growing section of the economy as well there. There's some cost risk there too, isn't it?
Yes, well, there's a number of issues with gig work that, again, the facts are really important. The level of gig work in the workforce is contested, but it's around half a percent of the workforce, half of 1%. This cohort is a subset of the independent contractors in the workforce, and the independent contractors in the workforce are about 7.8%. That's come down from 9% over the last five years or so.
This idea that we've got this large growing proportion of gig workers is not borne out by the facts. Yes, there are a lot of gig workers, but most of them are doing the gig work, not as their main job, but as supplementary income. The risk with what Labor is proposing is that it's not just more regulation for gig work. It could potentially disturb the meaning of an independent contractor, and that could have major negative implications for sectors like construction, transport, professional services, etc, where a lot of independent contractors are engaged.
Okay, so a tiny part of the workforce, but obviously a highly visible one that's been in the media a lot because of the various cases going on, but a very small part of the issue that one of those things is going to follow up, should the election go that way? And top of other policies before we get on the other items, abolishing the Australian Building Construction Commission and abolishing the Registered Organizations Commission. The first one there, the Building Construction's had a bit of profile in recent weeks, and it would be a costly and difficult exercise that a lot of people have heard strongly. That's right, the ABCC is carrying out a vital role.
The CFMEU are continuing to adopt this law-breaking model that in the last few weeks, the high quarters even weighed in on. And unless there is a strong regulator continuing to hold the CFMEU to account this law-breaking model will continue, and of course that has a big impact on businesses, it has a big impact on consumers who are paying for the higher construction costs that flow from all of that unlawful activity. Okay, well moving now to the second item in this discussion. The significant issues brief for the month is the Annual Wage Review.
So the Annual Wage Review 2021 is continuing, so we filed our initial submission on April 3 further rounds to go. What are our arguments to the Commission on the Wage Review this year? Well, what we're arguing is of course, because this is a wage increase that applies across every sector, the Commission shouldn't be looking at sectors that are doing well, or even average outcomes across multiple sectors. It's got to pitch the increase at a level that all sectors can bear.
We have the highest minimum wage in the whole world, and we're sort of going backwards and forwards a bit with Luxembourg, but we're way ahead of other developed countries in terms of the national minimum wage. And every year of course through the Annual Wage Review, the amount goes up. So this year, there are some significant issues, notably the latest inflation figure, which has come out recently and is in excess of 5% as the headline figure. So that of course is going to be hotly contested as to what the appropriate level of wage increases in this higher inflation environment that we're currently seeing.
Okay, and the two sectors with the largest proportion of low paid award-relied employees, those ones that are having difficulties accommodation food services and retail trade, particularly hard hit by the pandemic? Yes, so this goes to that issue that I mentioned, that you've really got to look at the whole picture and decide what is an appropriate wage increase that the employers across all industry sectors can bear. Now of course, some sectors tend to pay people award rates more than other sectors, like sectors like restaurants and hospitality and retail. There are a lot of people who are paid right on the award rate, so any annual wage increase has a direct impact on those businesses.
So the annual wage increase does not need to be applied on over-reward rates. Now what we have proposed is an increase of 2%, but that needs to be conceded in the context that employers are facing another half a percent increase in the seagrainuation guarantee from one July. So the average wage increase is about 1.3% increase in pre-tax income for workers on the national minimum wage. So if you add up the 2% with the half a percent increase for the seagrainuation guarantee and that 1.3% our proposal would increase rates by 3.8% for those on the national minimum wage, or it would deliver a remuneration boost for them of that magnitude.
So that's the average wage per week at the base trade level increase. So that's the take up the national minimum wage to around $788 a week, which would also leave Australia still with a high minimum wage globally. Yes, very high globally. And of course, this is about the national minimum wage.
Most people don't pay the national minimum wage. They pay award rates which are above the national minimum wage. So when you look at effectively the fact that we have 1,000 legally enforceable minimum wage rates in Australia or more than 1,000 in fact through the award system, we would have by far the highest minimum wage in the world. Okay, so just going to the final issue, the clear work commission is hearing a major work value case in which the unions are seeking a 25% increase in wages under the age care award, the nurses award, social community, home care and disability services industry award.
Now how is this going to provide implications for other industries if it's just about those particular ones? Yes, this is a case to really watch. And it has been focused on particularly by Labor in the current election campaign. Now there's a bit of history to where we're at with this case because the unions have been trying to increase wage rates for aged care workers for several years.
They tried to do that through an equal remuneration case by arguing that this is a feminised industry and that people are paid less relative to other industries like the manufacturing industry, which are dominated by males and they rent that case unsuccessfully. So they've had another go in running what's known as a work value case and these cases have been rare up until now. But this is an argument that the value of the work has changed over time. Now most of the wage rates in the federal award system go back to rates and relativities that were set around 1989 through a process called the Structural Efficiency Principal Process at the time.
So the argument is well over the course of all of these years the value of the work carried out by an aged care worker has changed and the unions are saying it's changed by 25%. If they succeed the risk is of course that there will be a flood of these cases across other industries. Okay, well we watched that one I think it's due for hearing between 26 April and 11 May so it's got a bit of time to run on that. Is that something that the AI group would intervene on or just keep watching brief on that?
We're keeping a watching brief on that. It is a very evidence heavy case that is being run in the aged care sector so we're not directly involved but the outcome will be very important. Okay, let's wrap it up there. Thanks to Stephen Smith, AI group's international workplace relations policy and reminder that the full members only significant issues report available on our website at AIgroup.com.au.
That's all for now. See you next time.