Wage increase frustrates industry bodies

Industry and employee groups alike threw their hands up in frustration last Friday when a narrow majority of Fair Work Commission (FWC) panel members put through a 1.75 per cent increase to the minimum wage.

Starting June 1, businesses will be required to pay staff a minimum of $753.80 a week, or $19.84 an hour, although retail has been given permission to push back this increase to February 1, 2021.

This is far below the 3 per cent increase pushed through in 2019, and the 3.5 per cent in 2018, and amounts to an extra $13 a week. For some this seems like too much, while others argue it is not enough.

The National Retailers Association (NRA) and the Australian Retailers Association came out against the decision, with NRA chief executive Dominique Lamb stating it was difficult to reconcile the verdict with what the industry has experienced in the past six months.

“On February 1 next year, struggling retailers will wake up to find they are in a continuing nightmare, where the Fair Work Commission completely ignores the commercial reality of being in business in Australia today,” Lamb said.

“The bottom line is that businesses cannot pay money that they do not have and will likely be hit with two wage increases in February and in July 2021 [when the next minimum wage decision will be made].”

ARA chief executive Paul Zahra, however, welcomed the balanced approach the FWC had taken in allowing the retail industry time to shore up its funds through the “critical Christmas period” before putting through the increase.

Employee unions were equally unhappy with the increase, with the Shop, Distributive and Allied Employees Association (SDA) describing the delayed wage increase for retail workers as “unfair and unjust”.

“A wage freeze over the next seven months is no way to thank those brave retail workers who continued to serve the Australian community during the height of the COVID crisis,” SDA national secretary Gerard Dwyer said.

“Delaying the minimum wage increase for retail workers, a sector dominated by women and young people who have been disproportionately disadvantaged during the height of the pandemic, while other ‘essential service’ workers receive a pay rise is not only unfair, it is an insult.”

Australian Council of Trade Union secretary Sally McManus also said it was frustrated by the staggered approach, noting that the majority of people on the minimum wage tend to spend “just about every cent” of their paycheque – with this money flowing right back into the struggling businesses fighting the wage increase.

“It is the fastest and most effective form of stimulus we can have,” McManus said.

Short-term pain for long-term gain

With seemingly every party frustrated by the result, what was the point of the increase?  

The FWC boiled it down to this: If wages increase now (or, in retail’s case, in February), they can make the case for a zero wage increase next July, when many employers have been forced to restrict or even temporarily cease operation and the country is likely deeper into recession.

The FWC’s decision is for Australian businesses to take short-term pain for long-term gain.

“Australia has almost certainly entered its most severe economic recession since the 1930s,” the FWC wrote in its decision.

“[And] the employment impacts are likely to be most acutely felt by workers in lower-paid jobs… with permanent reductions in future employment prospects and future earnings.”


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