Wage rise a blow to small business: industry

Fair Work Australia's decision to lift minimum wages next month has been met with criticism from business groups

June 6, 2011

Fair Work Australia’s decision to lift minimum wages next month has been met with criticism from business groups, with the Australian Chamber of Commerce and Industry (ACCI) deeming the increase "excessive".

Handing down its minimum wage judgement on Friday (June 3), FWA announced a 3.4 percent increase for those employed under the modern award system.

The increase
coincides with
a $19.40 raise in the national minimum wage for agreement and award-free workers, taking their weekly earnings to $589.30 or $15.51 per hour.

ACCI Chief Executive Peter Anderson says the 3.4 percent increase to award wages represents rises of between $21.28 and $38 for most award workers.

"The increase will add nearly $3 billion over the next year to the wages bill of Australia’s already vulnerable small and medium business sector," Anderson says.

He says unions and employees should not get ahead of themselves in the wake of this decision.

"The Tribunal failed to provide any funding basis or productivity offsets to fund the increase.

"Thus it risks being an expensive but pyric victory if, like last year, one third of small businesses have to cut working hours to make the rise fit in a wages budget or if, again like last year, its value is within months eaten up by interest rate rises."

The ACCI previously claimed a $9.50 increase to minimum wages would be more than enough.

Like the ACCI, the Australian Industry Group says the 3.4 percent increase to minimum wages will be punishing for big employing sectors.

"The cost to employers will be much higher after on-costs such as superannuation, workers' compensation and payroll tax are added," Chief Executive Heather Ridout says.

"We understand the pressures on the cost of living for the low paid, but this decision is on the high side and it exposes lower-skilled people to a greater risk of unemployment or underemployment," Ridout says.

The Ai Group last month recommended a $14 rise and for a six-month exemption for businesses affected by recent natural disasters.

Meanwhile the ACTU, which was lobbying for a $28 weekly increase to the minimum wage, says the rise will allow Australia’s lowest paid workers to keep pace with the cost of living, but not with the rest of the workforce.

ACTU Secretary Jeff Lawrence says the increase will benefit about 100,000 Australian workers, who take home the lowest pay in our community, while the majority of the remaining 1.3 million workers on award wages will receive around $22 a week.

"We are pleased that the panel’s decision nullifies the claims being put out by big business, who would have the community believe that the state of the economy is so parlous we can’t afford to pay our lowest paid a decent wage," he says.

Lawrence argues that compared to the rest of the developed world Australia is doing "very well", and says it is only fair that the lowest paid can share in the country’s prosperity.

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