Employer groups say raising minimum wage will cost jobs

A rise in the minimum wage will result in job losses and higher costs for thousands of Australian small businesses, business groups say.   

They say the decision should take into account the viability of struggling businesses.

The announcement is in response to a call from the Australian Council of Trade Unions, which wants the minimum wage raised by $21 a week. The Federal Government has called for restraint on any wage increases, and employers want wages frozen.

The Australian Chamber of Commerce and Industry says it would be irresponsible to raise the minimum wage during the current crisis. Scott Barklamb, ACCI’s director of workplace policy, says there will be an appropriate time to raise wages in the future, but now is not that time.  

“Australian employers are facing a crisis unparalleled in living memory,” he says. “The threat to jobs and the viability of business and smaller businesses in retail is the greatest in living memory. To increase the minimum wage in that context will displace jobs and the viability of SMEs.”

The $21 per week rise suggested by the ATCU would see minimum wages set at $564.78 a week for about 1.3 million Australians. ACTU secretary Jeff Lawrence claims the rise will help stimulate the economy.

Barklamb disagrees. “The consequences would be extremely damaging, and there would be further pressure on jobs and the survival of small businesses. It would be likely that workers’ hours would be cut.”

Barklamb claims that there will be appropriate times to raise the minimum wage after the economy has recovered, but that tax cuts and stimulus package payments should help out workers for now.

“There will be a return to minimum wage increases as the economy recovers, but you want to do that appropriately and not endanger any recovery.”

The Australian Retailers Association has also said that a minimum wage increase would damage the economy that proponents of the increase are trying to save.

“The unions are stuck in old-world thinking and need to be far more conscious of saving jobs, rather than putting pressure on employers to pay more. We are in unique financial times and need to show caution,” ARA director Richard Evans says.
 
“The ARA strongly recommends the Australian Fair Pay Commission (AFPC) should hand down a landmark decision of ‘nil’ or deferred minimum wage rise to reflect the unique times.”

The Australian Industry Group supports a minimum wage increase of just $8 per week, but also wants the Government to increase the low income tax offset from $1200 to $1500.

Chief executive Heather Ridout has said a $21 rise will “hurt the low-paid by reducing their employment security, and potentially shutting many unemployed out of the workforce”.

The Federal Government is also wary of a large increase, saying in its proposal to the AFPC that it supports a “considered rise in the low-income safety net, mindful of significant challenges facing the domestic economy”.

It also says that higher wages may raise costs for employers, which may result in lower demand for low-paid workers.

“As such, minimum wage increases are best targeted as an important means of protecting the low-paid rather than as macro-economic stimulus.”

Related articles:

• Minimum wage is unlikely to rise sharply
• Minimum wage decision will put job protection ahead of pay