Retail groups have warned of job cuts in the wake of last week’s increase in the minimum wage – the size of which has been described by one industry body as “out of touch”.
The Fair Work Commission (FWC) has boosted the national minimum wage by 5.75 per cent from 1 July, coupled with a scheduled 0.5 per cent boost in superannuation guarantee. Industry bodies say this will put added pressure on struggling businesses.
Australian Retailers Association CEO, Paul Zahra, said the scale of this increase will be difficult to absorb for retailers and cautioned there are no productivity improvements to be gained from this decision.
“Many retailers are under enormous financial pressure, with rising operating costs across the board,” Zahra said. “Supply chain costs have increased, utilities have increased, rent has increased, materials have increased and now labour will increase substantially. This is before factoring in that discretionary spending is softening – leaving many retailers concerned about operating costs.”
Zahra flagged that there needs to be labour productivity improvement to mitigate against the impact of this rise to avoid job losses this year.
The National Retail Association’s legal director Lindsay Carroll said the increase would be “unattainable for most businesses” forcing staff layoffs or cuts to working hours.
“At every turn business owners are being crunched with additional costs – interest rates, rent, electricity and they were already facing an increase in the superannuation guarantee from 1 July,” Carroll said. “Now they are expected to find an additional 5.75 per cent for their wages bill at a time when costs are rising across the board and consumers are tightening their belts.”
FWC president, Adam Hatcher, said the increase will make only a “modest contribution” to the total wage growth of the financial year.
“We acknowledge that this increase will not maintain the real value of modern award minimum wages, nor reverse the reduction real value which has occurred over recent years,” Hatcher said. “However, the level of wage increase we have determined as we consider the most that can recently be justified in the current economic circumstances.”
Meanwhile, Woolworths Group CEO Brad Banducci confirmed in a message to staff that the 145,000 hourly paid team members who work across the company’s supermarkets, Metros and Big W stores would receive the increase, saying it would add at least $51 a week for each one.
This story first appeared on our sister publication Inside FMCG
