Retailers likely to feel more financial stress due to minimum wage increase

Businesses in the retail sector are concerned that the minimum wage increase that took effect on 1 September will only add further strain to their finances already affected by the pandemic.

As one of the most affected industries by the ongoing COVID-19 pandemic, the retail sector was one of those that did not have to implement the minimum wage increase on 1 July, but with lockdowns still in place many in the industry see the two-month deferral as not long enough. As of yesterday the minimum wage in general retail has risen to $20.33 per hour, equating to $772.60 per week.

“This rise, while in line with other industries, could not have come at a worse time for retailers, particularly those stuck in lockdown in New South Wales and Victoria,” Employsure employment relations specialist Josh Paterson said. “The irony is that while the rise was delayed for general retail because they have been one of the hardest sectors hit by the pandemic, thousands of affected business owners have been in lockdown for that entire time, and as such have not seen the profit they would have hoped for.

“While a rise to the minimum wage will cause greater financial stress to retailers initially, once lockdowns end, it will mean employees will then have more money to funnel back into the economy, which could ultimately lead to more cashback in the pockets of business owners,” Paterson added.

The wage increase has been enacted, however, so Employsure is urging employers to educate themselves on the changes to the minimum wage and update their payroll systems and processes to avoid possible legal action. And, with Australia not likely to fully reopen until the national vaccination rate hits at least 80 per cent double doses, they they are also reminding businesses to do whatever they can to preserve as much cash as they can, while also “doing right” by their staff.

“While wage increases are a challenge for any business to implement, it does present an opportunity to improve financial health,” Paterson said. “Being creative with cost savings and identifying new efficiencies can help a business manage when wages increase.

“A freeze to the minimum wage in the future could be an option that will help support the country’s economic recovery,” he added. “We last saw it happen in 2009 due to unemployment concerns from the global financial crisis, and there’s no reason a global pandemic should be any different.”