Business SA is concerned that a 3 per cent increase to the minimum wage will place some small businesses already struggling with increasing overheads and high utility costs at risk.
This above-inflation increase will stymie economic growth and be difficult for all employers to absorb, coming as a blow to business owners.
Business SA Executive Director, Industry and Government Engagement, Anthony Penney, said the increase would make it difficult for business owners to absorb the extra wages, and could make them question whether they can afford to take on new staff.
The 3 per cent increase to the minimum wage is used as a catalyst to set Award wages, and those pay rises will now flow through to every industry across Australia.
Close to 60 per cent of business owners take home less than $50,000 per year – barely above the minimum wage – while being expected to increase the pay of their staff and absorb those costs.
“The Business SA – William Buck March Quarter Survey of Business Expectations found sales, revenue and profitability had all decreased, while wages and overheads were continuing to rise,” Mr Penney said.
“Those factors, combined with concerns ahead of the recent federal election, struck a blow to the confidence of the state’s business owners and operators. Many will find the minimum wage increase to further dent their operations and economic expectations.”
In the Australian Chamber of Commerce and Industry’s submission to the Fair Work Commission, supported by Business SA, it recommended a wage rise limited to 1.8 per cent, reflecting economic conditions.
The Fair Work Commission last year increased the minimum wage by 3.5 per cent – well above the current national CPI rate of 1.8 per cent. Over the past decade, the minimum wage has increased by 30 per cent, while inflation has increased by approximately 20 per cent.
“They have stuck to an approach of awarding generous minimum wage increases, despite inflation staying relatively flat,” Mr Penney said.
“The 3 per cent wage rise equates to an additional $200 million in wages for South Australian workers. While this seems on face value beneficial to the broader economy, it is business, particularly small business, which will have to fund these pay rises.”
The increase awarded by the Fair Work Commission’s Expert Panel on Minimum Wages will increase the National Minimum Wage from $719.20 to $740.80, or $21.60 per week, but for someone being paid the median award on $1,100 per week, this increase will be $33 per week.
Mr Penney said the Fair Work Commission’s decision to increase the minimum wage by 3 per cent is a disincentive to South Australian employers taking on more staff, and unhelpful to an economy growing slowly.
If you would like to arrange an interview with Anthony Penney, please call Business SA’s Director of Media and Communications, Verity Edwards, on 0412 678 942.
30 May 2019