Economy

New IR rules will force retailers and restaurants to hike prices by up to 20%

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Employer groups have lashed the Rudd Government’s new employment standards, claiming employers will be forced to raise prices by up to 20% when the new work rules are introduced in 2010.

Employer groups have lashed the Rudd Government’s new employment standards, claiming employers will be forced to raise prices by up to 20% when the new work rules are introduced in 2010.

Both the Restaurant and Catering Association and the Australian Retailers Association say wage increases for Sunday penalty and casual rates, included in details of the awards announced last Friday, will cost employers thousands and deliver few results.

Fast-food giant McDonald’s says it will raise prices to absorb the extra labour costs, while the Restaurant and Catering Association says lifting awards to the highest legal standard will cause “absolutely carnage” among restaurants, cafes and caterers.

Association chief executive John Hart says the increased costs for businesses will offset any benefits of higher wages.

“If you say this is good for workers then you have no understanding of the way these things work. The bottom line is all service businesses have a tangible amount of money they can afford on wages.”

“At the end of the day, restaurants make about $34,000 a year. If the average hourly wage goes up, they have no alternative but to cut staff or hours. It isn’t good for workers.”

Australian Retailers Association chief executive Richard Evans also hit out against the new awards. He claims the awards will stifle the economy at a time when stimulus is needed.

“Right now is the time retailers need direct help. The new retail award has ensured prices will go up and the consumer will pay at a time when their jobs are at risk,” Evans says.

“The new retail award’s focus on simplification and rationalisation failed to answer retailers’ call for a penalty rate structure recognising the modern deregulated retail market.”

Related stories:

Retailers face 14% wage bill increase under new award
Small businesses will be liable for redundancy under proposed new awards

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