Six monthly wage indexation 1978–1981

Updated time

Last updated

01 July 2015

In the Wage Fixation Principles case 1978[1] handed down on 14 September 1978 the Commission continued wage indexation but on the basis of six monthly not quarterly hearings.  It continued to provide for ‘catch-up of community movements’, in particularly the $24 award increase in the Metal Industry Award, and for annual hearings on increases to be awarded on account of productivity.  A date of hearing in respect of June and September quarter CPI increases was set down for 31 October 1978.

Notwithstanding the problem of lack of compliance with the restrictions of the system, the Commission decided to continue a centralised wage indexation system:

‘We have given careful consideration to what might happen if we decided not to persist with an orderly and centralized wage fixing system.  Without it we believe there could be quite a rapid increase in industrial disputes.  We have also concluded that despite the present economic situation and, in particular, the degree of unemployment, there are sufficient indications that economic reasons alone might not prevent an upsurge of wages, at first sectional and then becoming general, if no orderly system existed.  We therefore believe we should persist in our efforts to maintain such a system.’[2]

The indexation decisions in relation to the six monthly indexation system were:

  • June and September 1978 quarters of 2.1 and 1.9 per cent - the Commission awarded an increase of 4 per cent ‘without any reduction in the amount of the increase due to the economic costs of industrial disputation’, operative from 26 January 1979[3];
  • June and September 1979 quarters CPI increases of 5 or 5.1 per cent (the increase was calculated differently by the parties) - the Commission awarded an increase of 4.5 per cent operative from 4 January 1980, with the increases discounted by 0.5 per cent[4].  The Commission stressed that increases must be strictly controlled if the concept of a centralised and orderly system of wage determination was to survive.  It emphasised limiting the flow-on of increases from the metal industry agreement to $9.30 for tradespersons and $7.30 for non-tradespersons;
  • December 1979 and March 1980 Quarters CPI increases of 3 per cent and 2.2 per cent - the Commission awarded an increase of 4.2%.  The Commission said that ‘substantial compliance’ with the principles was an integral part of the ‘indexation package’.  The increase was discounted by 1.1 per cent, because of the oil levy, health care financing, work value increases, lack of substantial compliance, and the economic effects of industrial action.  It also commented on the 35 hour week campaign, and sought to avoid ‘processing of the claim by industrial action’[5];
  • June and September 1980 Quarters CPI increases at 2.8 and 1.9 per cent  - the Commission awarded an increase of 3.7 per cent[6].

An inquiry into wage fixing principles was held and a decision published in April 1981[7].  The Commission stressed that there could be no centralised system without substantial compliance with the principles which limited cost increases, and that there were currently real difficulties in achieving compliance.  New principles were established which provided for six monthly wage indexation with 80 per cent of CPI to be awarded[8].  In the National Wage Case - First Review 1981[9], an increase of 3.6% was awarded, with CPI at 2.1 per cent and 2.4 per cent for the December 1980 and March 1981 quarters.  This was the first and last decision under the new principles. 

[1] Print D8400 211 CAR 268

[2] 211 CAR 269 at 272

[3] 215 CAR 85 at 95-96

[4] Print D8920

[5] Print E3410 14 July 1980; 241 CAR 258

[6] Print E5000 9 January 1981; 250 CAR 79

[7] Print E6000B 7 April 1981 254 CAR 341

[8] Print E6000, p.14

[9] Print E6300 7 May 1981; 255 CAR 652