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Could you afford to give your employees a 65 per cent pay rise?

How would you react to a mandated 65 per cent pay rise for your workforce?

Many community services and not-for-profit sector businesses will be examining the repercussions of a Fair Work Australia decision to award their mostly female workforce pay rises of 40 to 65 percent over the next eight years, on the grounds of gender equality.

These rises will take place without any productivity offset and will be in addition to normal CPI rises.

Fair Work Australia recently accepted the Australian Services Union’s case that low pay in the community sector reflected “gender undervaluation” and that this needed to be remedied.

Prime Minister Julia Gillard welcomed the decision as “a significant advance for equal pay for women”, although Australian Industry Group Chief Executive Heather Ridout cautioned that the pay determination created “huge risks” leading to “a raft of union claims in other industries”.

Community sector business leaders have mixed views, with the future of these businesses resting on the willingness of Federal and State Governments to fund the pay rise.

Some employers face militant union or workforce demands for substantial pay rises, while others are able to pay staff well and achieve excellent productivity in the context of a co-operative workplace. IHR has observed that two-way communication between managers and staff is paramount in this respect. Employee surveys, for example, can help employers identify staff perceptions and beliefs about their workplaces and serve as a signpost on the journey to improving productivity, motivation, retention, performance, profitability and higher real wages.

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