An above-inflation increase to the minimum wage could add further pressure to SMEs, especially those operating under thin margins, the Council of Small Business Organisations Australia (Cosboa) warns.
The Government said on Thursday it would lodge a submission to the Annual Wage Review, recommending the Fair Work Commission award an “economically sustainable real wage increase”.
The move was said to help workers earn more and keep more of what they earn amid cost-of-living pressures.
However, Cosboa CEO Skye Cappuccio said the recommendation comes at a time when small businesses are facing compounding cost pressures, heightened uncertainty, and limited capacity to absorb further increases.
Cosboa data shows that 64 per cent of SMEs reported lower profits over the past year, and 60 per cent were unable to pay themselves at least occasionally. Some 72 per cent also considered rising costs the biggest barrier to growth.
Cappuccio added that recent volatility in fuel prices and supply uncertainty have intensified pressure across supply chains.
“Some businesses can pass on costs, but many cannot – and no small business can absorb sustained increases indefinitely.
“There is also significant uncertainty about how current conditions will play out in the coming months, making it extremely difficult for small businesses to plan, invest and make decisions about their workforce,” she said.
According to Cosboa, while cost-of-living pressures for workers are real and must be addressed, policy settings must also reflect the capacity constraints facing small businesses.
The council stressed that any changes to minimum wages should be approached with caution and careful consideration of timing and cumulative cost impacts.
“Delaying significant changes until there is greater clarity on current economic conditions would help ensure decisions do not unintentionally put businesses, jobs and investment at risk,” Cappuccio said.
