Small business calls for caution on changes to the minimum wage

Small business operators are asking the Fair Work Commission to keep any increase to the minimum wage below the rate of inflation, arguing that larger increases could have a direct impact on the profitability of their sectors going forward.

Politicians and businesses have started going head-to-head on potential changes to the country’s minimum wage, which is currently $672.70 per week, or $17.70 per hour, with submissions to the Fair Work Commission’s (FWC) annual wage review calling for caution and pointing to fragility across a number of sectors, from independent grocers to tourism and bricks-and-mortar retail.

In its submission to the review, the federal government has also urged the Commission to take a cautious approach to any increases, saying it should be “taking into account the uncertain economic outlook and the need to boost employment and job creation, particularly for young people and the low-skilled”.

The government argued “low income employees are often found in high-income households” and that the Commission should bear in mind that “increasing the national minimum wage is not an efficient way to address relative living standards or the needs of the low-paid”.

In 2016 the FWC decided on a 2.4% increase to the minimum wage. While the Australian Council of Trade Unions has this week called for a $45 a week increase to the minimum, or a 6.6% rise, several industry groups are supporting the government’s calls for caution, citing soft market conditions in their own sectors. Here’s a quick snapshot of where some of the major players stand.

ACTU

On Wednesday ACTU chief Sally McManus called for a $45 increase to the minimum weekly pay, saying “wage theft is a new business model for far too many employers”. However, Peter Strong, chief executive of the Council of Small Business of Australia, has rebutted that suggestion, saying it would do nothing to address the issue of people finding and keeping jobs.

“That’s going to hit small business really hard and it would hit employment really hard as well,” Strong told Sky News on Wednesday.

Australian Retailers Association 

The Australian Retailers Association has pointed to the “fragility” of the nation’s retailer sector in its proposal for the minimum wage to be increased 1.2% for the year ahead.

“With low to flat price growth and increased wages costs well above our international competitors, it’s critical that the Fair Work Commission take into account the weak economic trading conditions when making their decision,” ARA executive director Richard Zimmerman said on Wednesday.

Australian Chamber of Commerce and Industry

The Australian Chamber of Commerce and Industry is also recommending an increase of 1.2%. It argues that for the sake of addressing youth unemployment, the commission should ensure any increase is at the lower end of the spectrum.

“Genuine caution and restraint need to be exercised in wage setting in 2017 to ensure that the vulnerable position of young people, the low skilled and first time job seekers is not compounded,” it said in its submission.

The Australian Chamber’s position is supported by the Australian Hotels Association.

Master Grocers’ Association

The peak body for the independent grocery and liquor sector says its sector could handle no more than a 1.1% increase to the national minimum wage, citing significant challenges to the profitability of grocery businesses.

“If independent retailers need to cope with an unreasonably high wage increase they will have no choice but to implement measures such as staff reductions, and the employment and allocation of more shifts to juniors in preference to senior staff members,” the group said in its submission to the FWC.

“It is not economically feasible for the independent supermarket and liquor store sector across Australia, which forms the predominant membership of MGA, to sustain an increase to award rates in excess of 1.1 percent.”

Penalty rates and electorate concerns

With news of the Fair Work Commission’s decision to cut Sunday penalty rates for hospitality and retail workers still fresh in the electorate’s minds, submissions from the business community continue to be met with objections from workers, with aggressive rebuttals of business groups and politicians playing out on social media.

The Labor Party has said that while it will let the Commission come to its own decision on the minimum wage, it will push for a “fair and responsible increase” to the national standards.

On Facebook yesterday Labor MP Richard Marles called on the government to start talking about a bigger increase, arguing the Prime Minister is “out of touch”.

Elsewhere on Facebook overnight, some voters said they need a bigger increase to make ends meet, and to give more cash to give back to local businesses.

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