Minimum wage boost may push some retailers over the edge, says ARA

Portrait of a saleswoman or small business owner wearing medical mask at the counter in cafe or small shop. Concept of a retail business during a pandemic

The 5.2 per cent increase in the minimum wage announced by the Fair Work Commission has been greeted with alarm in the retail sector.

After the change,which comes into effect on 1 July, the minimum wage will be $21.38 per hour or $812.60 per week, however, workers in some sectors, such as aviation, tourism and hospitality, will have to wait until October.

Australian Retailers Association’s (ARA) chief Paul Zahra said the boost to the minimum wage is the highest in more than two decades as retailers continue to manoeuvre economic challenges.

“Whilst the ARA supported a fair and balanced increase to the minimum wage, we fear the scale of this increase could tip some businesses over the edge,” Zahra said. “Acute supply chain issues, staff shortages and the rising cost of energy, fuel and materials are creating unprecedented financial pressure.”

Dominique Lamb, National Retail Association CEO, also expressed concern describing the increase as “completely out of touch” with the reality of modern businesses.

“The simple fact is that when businesses don’t have enough money to cover their expenses, they need to cut costs,” Lamb said. “There is no doubt that those cuts will lead to job losses in retail and no doubt in other areas of the economy as well.”

Fair Work Commission president Iain Ross said the most “significant change” since last year has been the sharp rise in the cost of living and the strengthening of the labour market.

“At the aggregate level, labour market performance has been particularly strong. The unemployment rate has fallen to 3.9 per cent, compared to 5.5 per cent in April 2021, at the time of the last review,” Ross said. “Taking all the relevant considerations into account, we have decided to award an increase of $40 per week to the national minimum wage.”

This story first appeared on our sister publication Inside Retail