Industry groups have slammed the decision by Fair Work Australia to increase the national minimum wage by $17.10 a week, warning it will impose a major burden on small businesses.
FWA’s decision to increase the minimum wage will take effect from the first pay period starting on or after July 1 this year. The decision increases minimum weekly wages by 2.9%.
“This also applies to minimum wages for juniors, trainees and apprentices, employees with a disability and to piece rates,” FWA said in a statement.
“The new national minimum wage will be $606.40 per week or $15.96 per hour. All employers should check their payroll obligations to make sure they are meeting their responsibilities.”
According to Treasurer Wayne Swan, the move will help low-income working families manage the cost of living.
“Today’s decision will benefit the more than 1.36 million Australians who rely on awards to set their pay,” Swan said in a joint statement with Workplace Relations Minister Bill Shorten.
“The Australian Government, in its submissions to the independent panel, asked for any increase to the national minimum wage and award wages to be reflective of changes in living costs.”
“Today’s decision by the Minimum Wage Panel is well balanced and moderate.”
But industry groups aren’t happy, with the Australian Retailers Association accusing FWA of being “out of touch” with retailers’ struggles.
“Today’s decision means many retail jobs are officially on the line,” ARA executive director Russell Zimmerman says.
“FWA has handpicked and isolated the food, café and restaurant categories to come to the erroneous conclusion that the retail sector is growing.”
According to Zimmerman, FWA has “clutched at straws” in order to deny the retail sector the chance to focus on growth and maintain employment.
“[FWA] has not listened to evidence from retailers at the coalface of operations who have clearly stated they will not be increasing their staffing levels and are planning to, or have already, shed staff,” Zimmerman says.
Similarly, the Australian Industry Group says the severity of conditions in industries such as retail, tourism and manufacturing make these sectors very vulnerable to increased costs.
“The decision translates to an increase of $17.10 per week for the national minimum wage, $19.90 at the base trade level and up to $33.20 at the professional level,” AIG chief executive Innes Willox says.
“The cost to employers will be about 20% higher after on-costs such as superannuation, workers’ compensation and payroll tax are added.”
“FWA’s decision to grant a wage rise that is significantly higher than current productivity growth rates will push Australia’s already relatively high unit labour costs even further above our international competitors.”
Meanwhile, the Victorian Employers’ Chamber of Commerce and Industry says the decision will impose a further burden on business.
“Small and medium-sized businesses… will be hardest hit by this increase to their wages bill,” says Richard Clancy, VECCI executive director of industry policy and workplace relations.
“This announcement marks another significant increase in a three-year run now and will no doubt prove, once again, to have real significance for employers.”
This article first appeared on StartupSmart.