Free Subscription

  • Access 15 free news articles each month


Try one month for $7
  • Unlimited access to news,insights and opinions
  • Quarterly and weekly magazines
  • Independent research reports and forecasts
  • Quarterly webinars with industry experts
  • Q&A with retail leaders
  • Career advice
  • 10% discount on events

Minimum wage rise ‘devastating’ for retailers

time sheet, pay, wageAustralian retailers may find the minimum wage increase of 3.3 per cent devastating and The Fair Work Commission’s decision will stifle jobs growth within the retail sector, according to the Australian Retailer’s Association (ARA).

FWC yesterday confirmed the national minimum wage will increase to $694.90 per week, or $18.29 per hour, starting July 1, 2017. This is an increase of $22 per week and an increase of 59 cents per hour.

Russell Zimmerman, ARA executive director, said Australian retailers are already facing a complex operating environment and this increase will be extremely harmful to the growth and stability of the Australian retail industry.

“Today’s minimum wage increase of 3.3 per cent will suppress the benefits achieved by the penalty rates reduction, negatively affecting increased trading hours for retailers and further delaying employment growth across the sector,” Zimmerman said.

“With the inherent weakness in today’s economic climate, along with tax increases about to hit consumers, this upsetting increase will strongly impede on employment growth within the industry.”

Given economic uncertainties, historically low inflation along with rising costs for retailers, the association believes there will be real concerns for retail growth across Australia.

ARA said their proposed minimum wage increase of 1.2 per cent would have been the best way to preserve employment within the retail sector and are disappointed that the Fair Work Commission did not take into account the weak economic trading conditions when making their decision.

“Our members are constantly experiencing significant cost pressures through international competition and advances in technology therefore we believe this wage increase is unfavourable for all businesses operating in the retail sector,” Zimmerman said.

Dominique Lamb, NRA CEO, said the National Retail Association (NRA) and other employer groups would accept the decision, and challenged the union movement to do the same in relation to the independent Commission’s decision on Sunday penalty rates.

“Employer groups won’t go out with a national advertising campaign after today’s wage increase complaining that the decision will take money out of the pockets of small business owners, even though it will,” she said.

“We won’t be demanding that politicians suddenly step in with legislation to override the decision of the expert Commission, even though they could.

“We won’t promise to accept the independent umpire’s verdict before it’s handed down, but then renege on that commitment once we see the decision.

“And most importantly, we won’t set out on a divisive and emotive campaign to undermine public confidence in the Commission and to portray workers as evil and greedy simply for accepting the umpire’s decision.  Because that kind of rhetoric does nothing to help jobs creation.”

Lamb said it would “be nice to see the union movement, who will no doubt grab today’s wage increase with both hands,” also accept the Commission’s verdict in relation to Sunday penalty rates, “because the point of having an independent umpire is that these important decisions are not made in the court of public opinion.”

“They are deliberately removed from the political process to ensure fairness, consistency and – most importantly – sensible decisions based on real evidence rather than fear campaigns,” she said. “You can’t accept the decisions that you like and then stamp your feet to have the politicians overturn the ones you don’t like.”

Lamb added it is time for everybody to stop this damaging debate and move forward with implementing today’s wage increase and the penalty rates decision, in the interests of businesses and their staff.

Australia’s 2.3 million lowest paid workers will get their biggest pay rise in six years but the industrial umpire concedes it is still not enough to lift them all out of poverty.

Neither unions nor business groups are happy with the 3.3 per cent increase in the national minimum wage and modern award minimum wages, which they say will be negated by cuts to penalty rates from July 1.

Fair Work Commission president Justice Iain Ross says the increase will not lead to inflationary pressure and is highly unlikely to have any measurable negative impact on employment.

“It will, however, mean an improvement in the real wages for those employees who are reliant on the national minimum wage and modern award minimum wages and an improvement in their relative living standards,” he said on Tuesday.

The FWC expert panel acknowledged the increase – the biggest since 2011 – is not enough to lift all 2.3 million employees who rely on minimum rates of pay out of poverty, particularly those households with dependent children and a single wage earner.

But Justice Ross said an increase of the size necessary to immediately lift all full-time workers out of poverty would likely have adverse employment effects on groups already marginalised in the labour market, with a corresponding impact on households’ vulnerability due to a loss of employment or hours.

The Australian Catholic Council for Employment Relations says while the increase is more generous than in previous years, it is still woefully inadequate to halt the widening gap between the rich and poor.

“The national minimum wage can no longer be described as a living wage,” acting ACCER chair Tony Farley said.

ACTU secretary Sally McManus said the modest pay increase of only 59 cents an hour was not enough to raise people out of poverty.

“The minimum wage will now be just over $36,000 a year. That’s not enough to support yourself, let alone a partner and a family anywhere in Australia.”

McManus says 700,000 workers in retail and hospitality will effectively not receive the pay increase because of the cut in penalty rates from July 1.

Fast food, hospitality, retail and pharmacy workers will have their Sunday penalty rates cut by five percentage points, with deeper cuts over the next three years.

Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.

You have 7 free articles.