Minimum wage rise to impact small businesses

From 1 July this year, Australian workers on the minimum wage will receive a $17.10 increase to their weekly pay, or 2.9 per cent, up from the last increase in 2011.

Fair Work Australia's (FWA) decision on Friday lifted the weekly salary for the country's lowest paid workers from $589.30 to $606.40 a week, which equates to $15.96 per hour. Employees with disabilities that do not affect their productivity will also receive this wage.

According to Treasurer Wayne Swan, this decision will benefit more than 1.36 million Australians who rely on awards to set their pay.

"The Australian Government, in its submissions to the independent panel, asked for any increase to the National Minimum Wage and award wages to be reflective of changes in living costs.

"The increase of $17.10 a week will be welcomed by those workers on low incomes who are doing it tough. The decision by the minimum wage panel is well balanced and moderate, reflecting the underlying strength of the Australian economy in an uncertain global economic environment."

While employees are to benefit, this decision places a further burden on small business employers, who are already doing it tough in today's two-speed economy.

A number of industry groups have criticised the minimum wage rise, in particular the Australian Retailers Association (ARA), which has labelled Fair Work's decision "out of touch" with the challenges of the retail industry in terms of retaining employees and keeping themselves open for business.

"The retail sector is already struggling to give flexible hours to those people in society who need them most, including part time hours and weekend work to fit around family and study commitments," said ARA Executive Director, Russell Zimmerman.

The Victorian Employers' Chamber of Commerce and Industry has also stated that SMEs will be the hardest hit given that they provide jobs for three-quarters of all award-related employees; while the Australian Council of Trade Unions has argued that this decision will widen the gap between minimum wage earners and the rest of the workforce.

Australian Industry Group (Ai Group) has added that the problems in the non-mining sector such as manufacturing, tourism and retail have made businesses in these sectors very vulnerable to increased costs.

"The cost to employers will be about 20 per cent higher after on-costs such as superannuation, workers' compensation and payroll tax are added," said Ai Group Chief Executive, Innes Willox.

"FWA's decision to grant a wage rise that is significantly higher than current productivity growth rates will push Australia's already relatively high unit labour costs even further above our international competitors."

In anticipation of these perceived issues, FWA has announced its intention to investigate the potential impact of minimum wage increases on award-reliant small businesses, as well as a data analysis of small business characteristics.

More information can be found on the FWA website here.

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