The decision to raise the minimum wage by Fair Work will affect over 2.2 million Australians who are currently employed under awards schemes. The minimum wage will increase to $19.49 per hour ($740.80 per week) for a full time staff member.
The Fair Work Commission president, Justice Ian Ross, has announced the minimum wage will increase by 3 per cent for Australians employed under modern awards or minimum wage schemes.
The increase is less than that called for by the Australian Council of Trade Unions who had argued for a 6 per cent increase for workers employed under an awards scheme, but according to Ross is more in keeping with the current economic climate.
“We are satisfied the level of increase we have decided upon will not lead to any adverse inflationary outcome and nor will it have any measurable negative impact on employment,” said Justice Ross.
“However, such increases will mean an improvement in the real wages of employees who a reliant on minimum wages and an improvement in their living standards.”
The 3 per cent rise is a blow to many small business owners who had lobbied for a lesser increase, with the Australian Chamber of Commerce even going so far as to suggest that an increase over 1.8 per cent could cost jobs.
Founder and managing director of workplace relations firm Employsure, Ed Mallett said the decision today by Fair Work will have a disproportionate impact on small business owners who are already feeling the pressure of a slowed economy and have few variable that can change to maintain profitability.
“Some of our small business clients are considering reducing costs, increasing prices, reducing staff or reducing operating hours…or a mixed approach to maintain current profitability,” he said.
“Can they really just add the extra staff cost to the price of your coffee, for example? Would customers accept that?” Mallett asked.
Mallett suggests the yearly wage bill for Australian businesses could increase up to $2.2 billion. For small business owners, this cost increase is extremely problematic.
“Most SMEs won’t be charging customers 3 per cent extra from 1 July; but will need to come up with an extra $21.60 per week per employee,” Mallett said.
The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell suggested while groups with vested interests would not be happy with today’s outcome, the ombudsman said it is important to back the independent process that led to the decision.
“The Fair Work Commission has acted independently with a panel of experts assessing all relevant viewpoints and information available to them,” said Carnell.
“The decision to pay Australia’s 2.2 million award dependent workers an extra $21.60 per week from July 1 fell well short of the $43 per week the Australian Council of Trade Unions lobbied for but was also more than the 2 per cent business groups wanted.
“Australia already has one of the highest minimum wages in the world. The increase awarded exceeds inflation and that will impact small businesses, many of which are doing it tough right now.
“But it’s important to respect the independent role of the Fair Work Commission, Carnell concluded.
This post originally appeared on Kochie’s Business Builders and is republished here with permission.