The government has announced that effective 1 July, the standard minimum wage will be raised by 5.2 per cent to $21.38 per hour ($812.60 per week), while the award minimum wage will be raised by 4.6 per cent to a minimum increase of $40 per week, depending on the award.
The news is good for low-income workers but many businesses, espedciually smaller ones, are not likely to be feeling so positive about the development.
Workplace advisory firm Employsure shared SME owners’ concerns, saying that a wage increase will create a huge negative impact on all employers, and especially the SMEs that make up over 95 per cent of Australian businesses.
“The impact of this change cannot be understated, businesses are already doing it tough and with this announcement from the Fair Work Commission, it feels like business owners just can’t catch a break,” Employsure CEO David Price said. “We are anticipating an influx of calls in the thousands from concerned employers seeking help around how they will implement and afford these changes. It is an unfortunate reality that some businesses who are already on the edge will simply no longer be able to operate.”
Employsure pointed out that many businesses are reeling from multiple issues they are facing, from chronic staff shortages, inflation that has reached record levels at 5.1 per cent, and rising costs brought by said inflation and other outside factors, particularly the ongoing crisis in Europe.
While the overall effect of wage increase has yet to be seen, Employsure noted that this may create a domino effect with increased staff expenses to be passed on to the consumer compounding already high cost of living pressures.
“We recommend any business seeking help around interpreting these changes to seek advice, get informed, and prepare to update their payroll systems to avoid underpayment when the increase comes into effect,” Price said.
Business Council chief executive Jennifer Westacott added her own words of warning, saying that Australia needs to lift its ambition above the safety net to sustainably lift wages across the economy.
“This decision will put pressure on many businesses so it must be matched with genuine reform and action to ease chronic labour shortages across the economy,” Westacott said. “Wage inflation is not the same as long term wages growth. Wage inflation without productivity would hold back the economy and put Australia’s record low unemployment rate at risk.”