Fair Work awards minimum pay increase of $19.40: Midday Roundup

Fair Work Australia has awarded the country’s lowest-paid a minimum wage increase of $19.40 per week, about halfway between business and union requests.

Fair Work 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 is $19.80 based on an hourly rate.

While business groups had requested an increase of just $10 per week, unions had sought a $28 per week rise.

Fair Work said in a statement that despite many companies continuing to struggle under the impact of floods in Queensland and New South Wales, and Cyclone Yasi, the starting date of the new wage regime will not change.

“We are conscious of the hardship which has been inflicted on many businesses particularly small businesses by recent natural disasters in many parts of Australia and in Queensland in particular,” he said.

“A deferral of the rise in minimum wages would make some contribution towards easing the burden on those businesses.

Fair Work also noted in its decision that “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”.

Business groups react against wage hike

Business groups have reacted strongly against the Fair Work decision to increase the minimum wage, with the Australian Retailers Association saying the move was a “thoughtless” decision that would have a “disastrous” impact.

ARA executive director Russell Zimmerman said the decision shows “total disregard” for the weakness in the retail sector.

“Instead of paying heed to the already tough trading conditions specific to the sector, retailers will feel the biggest impact of the wage increase with the shop assistant rate increasing by over $21 per week,” Zimmerman said.

“Small to medium businesses will be hit the hardest. Many of the bigger companies are protected from the rise due to the EBA’s 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.”

Australian Chamber of Commerce and Industry spokesman David Gregory told the ABC that businesses to be hurt the most are already “doing it tough”.

“Many of the businesses we talk to would see themselves in that slower lane of the current economic recovery.”

However, Australian Council of Trade Unions secretary Jeff Lawrence said the requested increase of $28 is “modest” and that businesses have the capacity to pay.

“We’ve got a significant boom that’s coming on in terms of mining investments, so… we think it’s appropriate that some of the fruits of what’s happening in the economy are shared more equally.”

Services sector contracts in May

Activity in the services sector contracted in May despite an increase in April, according to the Australian Industry Group-Commonwealth Bank Australian Performances of Services Index.

The index fell by 1.6 points to 49.9 points, just under the 50-point level separating expansion from contraction.

“The sub-sectors exposed to household spending such as accommodation, cafes and restaurants were more likely to report flat or contracting activity during the month,” AIG chief Heather Ridout said in a statement.

“While consumers remain cautious, there were positive signs of improving business confidence with lifts in activity in the professional service sub-sectors, including the finance and insurance, communication services and property and business service sub-sectors.”

Shares flat after weak Wall Street leads

The Australian sharemarket has opened flat this morning after weak leads from Wall Street.

The benchmark S&P/ASX200 index was down seven points or 0.17% to 4592.7 at 12.10 AEST, while the Australian dollar rose to $US1.06c.

AMP shares rose 0.2% to $5.03, while Commonwealth Bank shares gained 0.3% to $49.55. Westpac rose 0.61% to $21.58 as ANZ gained 0.42% to $21.53.

In the United States the Dow Jones Industrial Average lost 0.34% or 41 points to 12,248.