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Reward Management Assignment: Discussion Of Fair Works Act


Reward Management Assignment Overview:
The Case Study addresses different stakeholders’ perspectives on the regulation and negotiation of reward, an issue that we address primarily in Session 2 but also throughout the unit.

Australian regulation provides that the Fair Work Commission is required to review modern award minimum wage and to make a national minimum wage order. This work is conducted by the Minimum Wage Panel. The Panel is required to conduct an annual wage review in each financial year. Any determination made varying minimum wage in modern awards in the review must come into operation on 1 July 2021 in the next financial year, unless there are exceptional circumstances.

All employees working in Australia are entitled to a minimum wage. This is the lowest amount an employee can be paid for the work that they’re doing. The minimum wage refers to the amount of pay before tax is taken out (gross pay).

As of 1 July 2021, the national minimum wage is $20.33 per hour or $772.60 per week. The 2.5% increase, as well as updates to superannuation and changes to some terms and conditions in several awards, applies from 1 July 2021.

The Fair Work Act sets out some important process requirements for the review. They include the provision of a reasonable opportunity for all persons and bodies to make written submissions, publication of the written submissions and a reasonable opportunity for submissions to be made in reply.

Traditionally, these submissions reflect stakeholders’ views as to the reference of minimum wage regulation.

The majority decision from the 2019-20 Review ’found that the impact of the COVID-19 pandemic has not been consistent across all sectors of the economy.’ This conclusion was supported by data from the Australian Bureau of Statistics (ABS) Weekly payroll jobs and wages in Australia among other sources.

Having analysed these documents, please answer the following:

The approach to minimum wage determination provided in the FWA is a hybrid of two key theoretical approaches to wage determination. The hybrid approach provided for the FWA aims to benefit the interest of both employees and employers. The 2020-21 minimum wage review decision of the FWC demonstrates that the aims of the FWA have been achieved.

Critically evaluate this assertion with reference to:

The contrasting interests to minimum wage determination are reflected in the submission of the (ACTU) Australian Council of Trade Union on one side and (Ai Group) Australian Industry Group and Australian Chamber of Commerce & Industry (ACCI) on the other side.

The extent to which this tripartite agreement approach on minimum wage determination aligns with contemporary reward management to preserve both business competitiveness and fair work conditions.


Executive Summary
From the overall analysis done in the reward management assignment, it can be stated that the AI group submissions are in conflict with that of the AICTE and adding to this the government decision is not appropriately placed. A minimum age increase in the overall scope of the economy is probable to slow down job growth and employment. Thus, it is required to reverse engineer the process by primarily reducing minimum wage to incentivize employment and then restructuring the plan two years later to ensure that the growth of the economy is stable and restructured.

A review and discussion of the Fair Works increase in minimum wage requirements will be undertaken through this case study. As per revisions that are made on a yearly basis the event of Covid-19 has increasingly brought a standstill to operations in the case of the economy of Australia. However, the overall implications of this have been distributed unequally and this needs to be addressed. The areas of affect and the areas that are not being affected need to be taken into consideration. While the Fairwork council in Australia undertakes a hybrid approach, discussion between the neoclassical approach and the classical approach need to be reviewed and understood in depth. Bringing out the perfect mechanism to not only ensure economic growth, but fair rights and pay is essential.

Analysis and Discussion
In respect to the concepts that we have discussed it is important to get a brief idea of what they mean to begin with. The neoclassical approach is a newer approach that takes into account several different economic factors. The factors that are regarded and taken into account are elasticity, price and most importantly, demand and supply. Demand and its concept are explored in much detail and depth through an approach that has been brought out. It is important to understand that the Australian GDP has increased. In Fact even the household consumption rates have increased as well during the advent of the endemic However, a primary question that needs to be asked and understood is whether these factors actually encompass the scope of the revisions that have been made. Let’s take a look into a few more details of the same. It was reported in the final decision that the household consumption has increased by at least half a percent (, 2021). This indicates that the demand for goods and services is considerably higher than it was supposed to be. Many experts and researchers have concluded with this that the overall Australian economic recovery is underway. However, in addition to this, the neoclassical approach also talks about supply.

Taking into account the study of Cambefort (2020), it can be viewed that the increase in the household consumption may be an after effect and result of hoarding. Statistically the increase may have resulted due to the factor that the household spending was maximum. But looking at it through a holistic perspective suggests that hoarding has played a major role in skewing the research results when undertaken through a black and white scope. This is why conducting a review on the abscess of numbers solely is not a comprehensive approach that takes into account the most affected. In submission by the AI Group it can be viewed that the increase of minimum wage by 3.5 % as per the submissions by the AICTE has been opposed vehemently cornering economic vulnerabilities. However, advocating on behalf of the AI group would indicate that there is a clear conflict between the arguments using the neoclassical approach to stand against the classical or systematic approach. The main reason we render is that if economic vulnerabilities are a maximum consideration and the argument stands for disequilibrium, then along with this the wage increase demanded is a solution to ensure economic security due to the same vulnerabilities addressed in the submission by the AI group (, 2021).

Now let’s dive into the classical or systematic approach that is used to create the hybrid model. This model implies fairness and equality to be maintained. Research however, has consistently implicated that the overall loss being incurred to the people coming from low status jobs is considerably higher. The most affected demographic in the mix is considered to be the youth who are low skilled and have little to no experience. Due to increased competition in markets and job opportunities there has been a regressive trend in youth employment. Youth employment from the study of Fox and Kaul (2018), is also correlative to family incomes in a major way. Even though popular opinion may imply that family income. If youth employment is deemed to be essential in low-income countries then it can be applied to low-income households in developed countries as well. The difference is only stark because in spite of the availability of resources low income households still exist. Using the classical and more systematic approach, if it is taken into account that the overall inflation rates have increased and hoarding is a possible cause for the increase in household consumption, it may be estimated that in the next two to three quarters household consumption will restore itself to pre-covid levels. This will reverse impact the GDP growth that is being assumed by AI submissions. Thus, it can be argued that inevitably this methodology would also lead to unsustainable means of growth and development with further segmentation and the implication of “rich get richer and poor get poorer” ideologies. Hoarding is a main cause as the uneven distribution of commodities can also result in mass poverty to eat in. Inflation as an economic concept as indicated through the work of Haet al.(2019), also occurs due to overconsumption trends and limited supply. If the pandemic and its impact is reviewed then these elements are quite inevitable. The reason being that hoarding is a conduit of overconsumption and the element of supply shortage is very evident (Coibion et al. 2020).

However, using both the theories and applying them to assess the decision is important. In consideration of the factors that are involved it is important to understand the army elements of the current economy. The economy is still in disbalance and creating the right pathway is important. While the minimum wage in 2020 was $ 19.84/hour the increase of the same to $20.33/ hour is an increase of just 2.5 % overall (, 2021). Increasing the superannuation is a good method to insure older people of the economy. However, for the youth the implications are different. Increasing the minimum wage only will impact the jobs of the youth with lower skills (, 2021). The way this would work is because of the different impositions on the companies itself. It can be viewed that the current situation indicates that the AI submissions have had a more negative feature associated with them because the push is towards lowering the minimum wage or keeping it stable. A lack of implementation of fair work additional to this would limit job opportunities as naturally companies would want to hire individuals with larger skill sets in their portfolio.

There is a high chance of this leading to major unemployment in the upcoming year with a greater burden on government resources. The natural course of action would be to implement the case of taxation laws and this would bring everything back to square one.

Recommendations in the light of the problems that we have are important to understand and implement as these are crucial to maintaining fair practice and trade across the overall industries. It can be viewed that we will take on a distinctive classical or systemized approach to implicate the recommendations to ensure that the neoclassical approach and its flaws are covered and backed up by corrective action ultimately. Using the concepts of demand and supply and taking into account the prospect of hoarding it can be understood primarily that the superannuation increase has been fair and strong. However, a reverse methodology is proposed for the minimum wage and this recommendation stretches over a span of two years in itself. It also will be added to the fiscal policy as it is essential. The government ought to ensure that the compromise this year can be recovered in the future with ease and convenience.

It is recommended to reduce the minimum wage along with simultaneous government disinvestments that need to be brought around. Setting and flow of money into youth employment needs to be redirected to correct the imbalance of job losses and acquisition at the same time. Dis-investment will lead to a larger amount of government subsidization taking into account the woes of the unemployed and the AI groups as well. This will later lead to better instances of employment of low skilled workers. Workers and minimum wage need to be deferred according to Ai group resubmissions if needed. Once unemployment is reduced, the minimum wage in the coming years of 2023 can be restructured to a higher margin to incorporate economic growth and boost. During the span of the years of 2021-22 and 2022-23 the government needs to provide subsidies to ensure that the economic inflation is reduced and hoarding can be counteracted.

Quintessentially it can be gauged that the impact of the overall problems and disturbances that have been reviewed are important to note and assure. It can be viewed that there is a larger need and implication of changing the way the entire system functions due to the unprecedented emergency that is hiding in plain sight. This is essential and the recommendations need to be implemented as soon as possible to ensure greater recovery mechanisms and avoid unforeseen collapses again.

Reference, (2021).Submission to the Fair Work Commission on the Minimum Wage. Available at: [Accessed on: 10 October, 2021]

Cambefort, M., 2020. How the COVID-19 Pandemic is Challenging Consumption. Markets, Globalization & Development Review, 5(1).

Coibion, O., Gorodnichenko, Y., Kumar, S. and Pedemonte, M., 2020. Inflation expectations as a policy tool?. Journal of International Economics, 124, p.103297.

Fox, L. and Kaul, U., 2018. The evidence is in: How should youth employment programs in low-income countries be designed?. Reward management assignment World Bank Policy Research Working Paper, (8500)., (2021) Summary of Decision. Available at: [Accessed on: 10 October, 2021], (2021). Ai GROUP SUBMISSION. Available at: [Accessed on: 10 October, 2021], (2021).DECISION. Available at: [Accessed on: 10 October, 2021]

Ha, J., Kose, M.A. and Ohnsorge, F. eds., 2019. Inflation in emerging and developing economies: Evolution, drivers, and policies. World Bank Publications.


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