Minimum wage hike prompts job loss warning

by Janie Smith05 Jun 2014
HR professionals may need to gear up for redundancies as the decision to lift Australia’s minimum wage by $18.70 per week from July 1 prompts job loss predictions from retailers, while the unions call for a higher wage.

The Australian Chamber of Commerce and Industry (ACCI) said today the decision will “destroy job opportunities and hit small-to-medium mum-and-dad businesses the hardest”.

ACCI CEO Kate Carnell said the economic reality was that “artificially high wages” destroy job opportunities.  

“These are the sorts of jobs that are often filled by the most vulnerable and low-paid workers, usually low-skilled and very sensitive to being priced out of existence by a one-size-fits-all approach by government.   

“ACCI argued strongly before the Commission that a rise of more than $8.50 at this time would impose unworkable pressure on employers who are already suffering under very difficult economic conditions.”

The Australian Retail Association said businesses were already dealing with sluggish retail figures and low consumer confidence and the minimum wage hike would cause stress and damage.

In a statement, the association said it was “severely disappointed” by the wage rise.

Executive director Russell Zimmerman said the association had also condemned the FWC’s decision to abolish junior wage rates for 20-year-old employees earlier this year.

“For retailers to now be slammed with further costs through an increase to the minimum wage is simply unwarranted, and sadly, we expect to see many retail businesses reduce their staff further this year as a result.”

However, the Australian Council of Trade Unions was disappointed that the wage increase was less than the $27 per week it was calling for and it expressed concern about the widening gap between the minimum wage and average earnings.

The ACTU released a statement prior to the decision, saying that a $27 weekly pay rise was essential if Australia was to avoid following the US in creating an “underclass of working poor”.

ACTU secretary Dave Oliver told ABC that the wage decision was “particularly unfair” when the National Accounts figures showed stronger than expected economic growth.
 
What's your take on the minimum wage rise? 

COMMENTS

  • by Mark 6/06/2014 12:25:40 PM

    People need to be paid a living wage. If businesses can't afford to pay people a reasonable wage, then they shouldn't be in business. It is not the role of our lowest paid workers to prop up unprofitable businesses or support greed of a few business owners.

  • by Vera 10/06/2014 1:18:58 PM

    That is stating the obvious Mark. But there are many people who work very long hours in their own small business, for very little profit - far less than they would receive if they were on wages/salary.

    Yet they do go into business, they do have the entrepreneur spirit; and they do employ others. And without them, the employment pool would be far smaller.

  • by Ken 18/06/2014 10:18:27 PM

    From people I know in retail, the biggest issues are rent, rates and electricity costs, which go up regardless every year, while profits remain the same or decrease. The employees in these shops also have living costs which increase inexorably every year. So everyone but the really high income earners are just getting poorer every year in real terms. Something has to give. Australia has just become too expensive. So while the greedy landlords, local government and power companies get their annual increases, is the workers wage supposed to stay the same?

    I'm a small business person myself. My office rent went up 40% last year and I have just had to lay off my one and only permanent employee. I'll probably outsource much of what he did to someone overseas, just like the big corporates are doing.

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