'Clear risk': Business groups say minimum wage rise could cost jobs
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'Clear risk': Business groups say minimum wage rise could cost jobs

Employer groups have warned a 3.5 per cent increase in the minimum wage - almost double what they were seeking - will stifle jobs and innovation and could send some businesses to the wall.

The Australian Retailers Association (ARA) had sought an increase of 1.9 per cent to boost employment. But the Fair Work Commission's 3.5 per cent rise from July 1 means the General Retail Industry Award will increase to $789.90 a week, or $20.79 an hour, for full-time and part-time employees and $25.98 an hour for casuals.

Russell Zimmerman from the Australian Retailers Association.

Russell Zimmerman from the Australian Retailers Association.Credit:Arsineh Houspian

Russell Zimmerman, executive director of the Australian Retailers Association, said the sector was already facing an unsteady trading environment, with monthly retail sales growth at about 2 per cent.

He said the Fair Work increase was well above inflation, which was running at 1.9 per cent in the March quarter, which would put the "brakes on employment and innovation throughout the industry”.

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“With retailers already struggling to keep their heads above water, today’s 3.5 per cent minimum wage increase will stifle retail growth and delay staff employment across the sector,” he said.

Australian Industry Group chief executive Innes Willox said the increase was out of step with wage movements across the economy, inflation and the pressures many businesses were under.

“Australia already had the second-highest national minimum wage in the world [just behind France] and today’s decision runs the risk of further harming the competitiveness of Australian businesses," Mr Willox said.

Ai Group chief executive Innes Willox said the increase was out of step with wage movements across the economy, inflation and the pressures many businesses were under.

Ai Group chief executive Innes Willox said the increase was out of step with wage movements across the economy, inflation and the pressures many businesses were under.Credit:Stewart Donn

“[T]here remains a clear risk that these businesses will be less able to afford creating new jobs or to offering their existing employees additional hours.

“The increase will result in a $24.30 per week increase to the national minimum wage, a $28.30 increase to the base trade rate and an increase of up to $47 per week to the award rates for professionals."

Australian Chamber of Commerce and Industry chief executive James Pearson said businesses that could not pass on significant rises to customers "will have to cut hours, cut jobs or both".

“More than half of small business owners earn less than $50,000 per year, and there will be a point at which they will wonder why they bother if wages are raised by more than prices, and business overheads are too high," he said.

ACCI chief executive James Pearson said businesses that could not pass on significant rises to customers 'will have to cut hours, cut jobs or both'.

ACCI chief executive James Pearson said businesses that could not pass on significant rises to customers 'will have to cut hours, cut jobs or both'.Credit:Andrew Meares

“We know that some push the argument that increased wages means increased spending. But explain that to the many businesses that are already unable to open on weekends or for longer hours due to the cost, and the many people who can’t get jobs or enough hours”.

Jos de Bruin, the chief executive of the Master Grocers Australia, said the increase took away an incentive to provide more jobs.

“Higher wages mean that less people will be employed in the retail industry," he said. "Retailers will look to putting staff off rather than increasing job opportunities. Many retailers are losing confidence in their ability to battle on and some will just close their doors."

Ray Markey, emeritus professor of employment relations in the Faculty of Business and Economics at Macquarie University, said the Fair Work decision had failed to satisfy either the Australian Council of Trade Unions or employer groups. The ACTU had asked for a 7.2 per cent, or $50-a-week, increase and employers had sought 1.8 to 1.9 per cent.

He said the increase was unlikely to have a major impact on stagnant wage growth.

"The increase will take effect on 1 July, when the second round of penalty rates cuts take effect. This will largely mute the minimum wage increase," he said.

Anna Patty is Workplace Editor for The Sydney Morning Herald. She is a former Education Editor, State Political Reporter and Health Reporter. Her reports on inequity in schools funding led to the Gonski reforms and won her national awards. Her coverage of health exposed unnecessary patient deaths at Campbelltown Hospital and led to judicial and parliamentary inquiries. At The Times of London, she exposed flaws in international medical trials.