Hospitality and retail industries call for a delay to minimum wage increase

The hospitality and retail industries are urging the Fair Work Commission to delay increasing the minimum wage this July to protect employers from the burden of two wage increases just five months apart.

In its submission to the Commission’s annual minimum wage review, the Restaurant and Catering Industry Association, which represents 48,000 businesses, is calling for no rise in the minimum wage, or a deferral of the next increase to February next year.

Restaurant and Catering chief executive, Wes Lambert, tells SmartCompany that it would be “wholly unfair” for the Commission to legislate a wage increase in July when the minimum wage under the hospitality, restaurant and registered and licensed club awards rose by 1.75% in February this year .

“The Fair Work Commission has set up this system that they are going to now have to continue with. Otherwise, it would be wholly unfair to group three, with two wage increases in less than four months,” Lambert says.

The three-group system for minimum wage

Following the Commission’s minimum wage review last year, increases to wages were split across three groups in response to COVID-19.

Group one included frontline health care- and education-based awards, which received a 1.75% increase in July.

Group two, which included construction, manufacturing and range of other industries, received its increase in November.

Group three received its wage increase in February this year, and included industries most affected by COVID-19, such as aviation and retail and hospitality.

Lambert says it is impossible to know how the February increase to the minimum wage under hospitality-related awards affected the industry because “no one has been able to do any modelling”.

The national minimum wage stands at $753.80 per week, or $19.84 per hour. There are about 180,000 people in Australia who earn the minimum wage of $19.84 per hour.

The National Retail Association — the peak retail industry group — is also calling for the Commission to delay any increase to the minimum wage for awards in the group three; however, it suggested the delay should be until November this year.

The National Retail Association additionally submitted to the Commission’s review that any increase to the minimum wage be equal to inflation in the level of prices for household goods and services.

Hospitality and retail industry groups both pointed out that ongoing restrictions and snap lockdowns have meant those industries have not fully recovered from the economic impact of the pandemic.

What’s more, the end of JobKeeper and the legislated superannuation guarantee — which will rise in July from 9.5% to 10% — will also increase the load on employers who are already under financial distress, the industry groups say.

State government views

The New South Wales and Victorian state governments both filed submissions to the Commission’s review, however, NSW did not indicate how much the minimum wage should increase.

The NSW government supports a “cautious approach” to reviewing the minimum wage, saying that governments should seek to drive wage growth using strategies to boost productivity.

NSW submitted that governments should play their role in implementing measures such as “lowering the tax burden, reducing red tape, and implementing forward looking regulation to support competition and innovation”.

Comparatively, the Victorian government submitted that the pandemic had a major impact on the Victorian labour market, emphasising how it worsened existing labour market inequalities.

The Victorian government said an increase of 2% to all minimum wages would help counterbalance increases in income inequality and provide opportunities for marginalised groups.