Earlier this month, the Fair Work Commission’s wage panel announced an increase in the minimum wage, by 2.5%.
The Australian minimum wage is set to rise from $19.84 an hour to $20.33, taking the minimum weekly wage up to $772.60 per week. This decision came about after observing the positive change in the country’s economic environment.
There are, however, certain key points to this news:
The increase will be delayed until November for the following industries:
- Retail traders such as hairdressers
- General retail traders’ wage increase will be delayed until September 1.
The fast-food industry will be seeing two increases within a six-month period.
The delay in wage raises for the above-mentioned sectors was decided due to these sectors being among the hardest hit by the covid pandemic. Their raises are being delayed to protect them from any future damage that could possibly arise from upcoming lockdowns.
How it affects businesses:
The increase in wages ordered by the Wage Panel affects businesses that are already struggling to pay normal dues. This decision is believed to not only halt recovery of businesses but may also make further employment an issue; especially those in the retail, food, and accommodation sectors.
With operational costs to pay off and other expenses that come in the way while running a business, employers will now be bearing the brunt of increases wages. And though this may be implemented at different times for different sectors, it’s still a factor that will make it tougher for all affected business.
Jenny Lambert, the acting chief executive of the Australian Chamber of Commerce and Industry commented on the issue saying, “This is a bitter pill to swallow for the approximately 230,000 small and family-owned businesses which dominate these particular sectors,” as reported by The Sydney Morning Herald.
The ACCI also argued that the rise may not affect bigger businesses but would increase the struggles of smaller businesses – since the wage rise as a whole would cost $3.6 billion. The Australian Council of Trade Unions had been pushing for a 3.5% increase, prior to the final decision being announced by the Fair Work Commission.
According to the Financial Review, major employer groups had argued that they were finding it difficult to afford more than CPI at 1.1%. CPI or Consumer Price Index measures household inflation and includes statistics about price change for categories for household expenditure, according to the Australian Bureau of Statistics.
These employers also revealed that the increase was too much when faced with 0.5% rise in superannuation next month. The decision to increase the minimum wage comes months after the federal government urged the wage panel to be cautious as it could constrain small business and jobs.
If you’re worried about changes to the minimum wage or need help on your business finances, The Alternative Board can help.