Fair Work Australia has awarded the country’s lowest paid workers a minimum wage increase of $19.40 per week, but industry groups say the move will hurt small businesses.
FWA said in a statement the decision will increase modern award minimum wages by 3.4%, with the new rate at $589.30 per week or $15.51 per hour, but this works out to be $19.80 based on an hourly rate.
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While business groups had requested an increase of just $10 per week, unions had been pushing for a $28 per week rise, saying Australia’s minimum wage earners would struggle to make ends meet unless they received a healthy pay rise.
The tribunal said it recognised that many businesses are facing a tough time after a spate of natural disasters, but it would not defer the date at which the increase in the minimum wage would come into effect.
Justice Geoffrey Giudice says the Australian economy has performed comparatively well over the past year.
“Notwithstanding the negative impact of the natural disasters on growth in the December quarter 2010, the economy performed comparatively well over the 12 months against a number of other developed countries,” Giudice says.
“In the 12 months since the last review, Australia’s economy has continued to perform strongly despite the impact of the recent floods and Cyclone Yasi.”
But business groups have slammed FWA’s decision to increase the minimum wage, labelling the move as thoughtless and counter-productive.
The Australian Retailers Association says the “one size fits all” approach will have a disastrous impact on the retail sector, already struggling with excessive overheads.
ARA executive director Russell Zimmerman said FWA’s blanket decision, lumping retailers in with other award-reliant sectors, shows a total disregard for the bleak trading conditions of Australia’s largest employer and will result in job cuts.
“Retailers will feel the biggest impact of the wage increase with the shop assistant rate increasing by over $21 per week,” Zimmerman said in a statement.
“Small to medium businesses will be hit the hardest. Many of the bigger companies are protected from the rise due to the EBAs they have in place.”
“Meanwhile, the smaller players are facing the same struggles as Australian workers with interest rate increases, more taxes, increased utility bills and a higher cost of living. Many will simply have to close their doors.”
The Australian Chamber of Commerce and Industry agrees with the ARA that the businesses most likely to suffer are already doing it tough.
“Many of the businesses we talk to would see themselves in that slower lane of the current economic recovery,” ACCI spokesperson David Gregory says.
The ACCI has argued a minimum wage rise will be counter-productive as it will prompt businesses to cut working hours and add to inflation pressure.
In its submission, the ACCI said last year’s record $26-a-week rise for workers saw one third of Australia’s small businesses reduce working hours.