Outcome 2 - effectiveness indicators

The effectiveness of Outcome 2 in achieving the government’s policy and programme objectives is measured through the indicators set out in Table 11 and described in greater detail below.

The department closely monitors and analyses these indicators and advises the Minister accordingly.

Table 11 The federal workplace relations system supports improved productivity outcomes
Performance indicator Year to June quarter 2014 Year to June quarter 2015
Labour productivity as measured by gross value added per hour worked in the market sector (annual, trend terms) 1.9% 0.7%
Australian Bureau of Statistics wage price index (annual, seasonally adjusted terms) 2.5% 2.3%

Note: ABS figures, as cited in previous annual reports, are subject to revision as more complete and accurate information becomes available.

Table 12 Low incidence of industrial action (allowing for variations in the bargaining cycle)
Performance indicator Year to June quarter 2014 Year to June quarter 2015
Working days lost per thousand employees 8.5 7.3
Table 13 Collective bargaining is widely used by employers and employees to negotiate pay and conditions
Performance indicator Year to June quarter 2014 Year to June quarter 2015
Number of workplaces whose employees had their pay determined by an enterprise agreement made under the Fair Work Act 2009a 6410 Fair Work Act agreements approved 5481 Fair Work Act agreements approved

a. Information on the number of workplaces covered by the enterprise agreement stream of the Fair Work Act is not available. The number of agreements made under the Fair Work Act has been used as an approximation.

Wages and earnings

The Australian Bureau of Statistics’ wage price index is the preferred measure of wages growth. The index increased by 2.3 per cent (seasonally adjusted) over the year to the June quarter 2015, down from 2.5 per cent over the year to the June quarter 2014. The softening of wages growth reflects the current state of the labour market.

Public sector wages grew by 2.5 per cent over the year to the June quarter 2015, and private sector wages increased by 2.2 per cent. In industry terms (original data), the highest wage growth was in financial and insurance services (2.8 per cent) and the lowest was in professional, scientific and technical services (1.7 per cent).

Productivity

Labour productivity—as measured by real gross value added per hour worked in the market sector—increased by 0.7 per cent (trend terms) over the year to the June quarter 2015, down from 1.9 per cent growth over the year to the June quarter 2014.

Market sector real gross value added increased by 2.4 per cent, while hours worked (in the market sector) increased by 1.7 per cent. It should be noted that short-term measures of productivity are prone to volatility and cyclical effects and should therefore be interpreted with caution.

Industrial disputes

Rates of industrial disputation declined over the year. Through the year to the June quarter 2015, 7.3 working days were lost per thousand employees. This was down from 8.5 working days lost per thousand employees through the year to the June quarter 2014. Through the year to the June quarter 2015, 76,800 working days were lost due to industrial disputes.

The construction industry accounted for the largest number of working days lost (29,800), followed by the combined education and training, health care and social assistance industries (9,400).

It should be noted that industrial disputes data are prone to short-term fluctuations and should be treated with caution.

Agreement making

A total of 5481 enterprise agreements were approved by the Fair Work Commission in the year to 30 June 2015, compared to 6410 agreements approved in the year to 30 June 2014. Most industries experienced a lower rate of agreement-making, but in terms of the number of agreements, the decrease was most pronounced in the construction, health care and social assistance industries. This is at least partly due to industry bargaining cycles, with enterprise agreements typically lasting three to four years. The average annualised wage increase under the enterprise agreements approved in the year to 30 June 2015 was 3.4 per cent (the same as in the year to 30 June 2014).