Minimum wage increase may lead to more SMEs struggling

Minimum wage

This month has seen a national minimum wage increase which put hourly wages at $19.84 per hour, a $0.35 hourly rate rise for workers in construction, mining, manufacturing and a range of other industries. While good news for workers, the timing of the rise could pose problems for SME owners according to workplace relations advisor Employsure.

“This increase comes at a time when a number of businesses simply can’t afford it,” Ed Mallett, Managing Director of Employsure, said. “Hundreds of businesses who were on the original JobKeeper wage subsidy scheme are now either no longer eligible or are on the new reduced payment, scheduled to drop again at the start of next year. Many of our clients have told us they haven’t fully recovered from the financial fallout this year as a result of COVID-19, and sadly, some have, or will have to, close as a result.”

Mallett was keen to remind employers that employees cannot legally be paid less than their applicable minimum wage, even if they agree to it, and called on employers to comply with the mandate, especially those covered under Group 2 Awards, to ensure they’ve updated their payroll.

He also urged businesses not to view the minimum wage increase mandate as an excuse to consider reducing staff numbers or increasing product costs.

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

“I believe a freeze to the minimum wage in the future will help support the country’s economic recovery. We last saw it happen in 2009 due to unemployment concerns from the global financial crisis, and a global pandemic shouldn’t be any different,” Mallett concluded.