News

Minimum wage hike a risk to staff levels

The Fair Work Commission’s Annual Wage Review decision to raise the minimum wage by $18.70 a week will force small businesses to reduce staff numbers.

John Hart, CEO of Restaurant and Catering Australia, said the decision rejected the association’s arguments for a wage freeze that would mitigate against record company insolvencies and business related bankruptcies.

“The Fair Work Commission acknowledged the 3 per cent increase would be on top of superannuation increases to 9.5 per cent from 1 July, 2014, however small businesses will most likely be forced to reduce headcount or weekly hours in order to pay these ongoing labour cost increases,” Mr Hart said.

FWC president justice Iain Ross said there had recently been almost no growth in the real value of award wages while other employees had enjoyed substantial pay increases. “The deterioration in the relative living standards of award-reliant workers, the needs of the low-paid, the recent widespread improvement in labour productivity growth, the historically low levels of real unit labour costs, and the absence, in aggregate, of cost pressures from the labour market, are all factors favouring a real increase in minimum wages,” he said.

The ACTU had been pushing for a weekly rise of $27 but employers said they would not be able to afford an increase of anything more than $8.50 a week.

The Australian Industry Group says it will put more pressure on struggling employers, particularly in the tourism sector.

“Many industry sectors and particularly those exposed to import competition are experiencing very tough business conditions,” AIG chief executive Innes Willox said in a statement.

And the Australian Chamber of Commerce and Industry said it would “destroy” job opportunities. “There is no generosity in raising wages to the point where people can’t find work when they need it,” ACCI chief executive Kate Carnell said in a statement.

Australian Retailers Association executive director Russell Zimmerman says the decision will prompt many businesses to sack staff.

Restaurant and Catering Australia is calling on the Australian government to amend the Fair Work Act provisions for annual wage reviews, arguing that “the current legislative provisions fail to recognise the plight of small businesses and their ability to pay the highest minimum wages in the world.”

The chief executive officer of the Accommodation Association of Australia, Richard Munro, said, “The 3 per cent increase in modern award minimum wages is higher than the accommodation industry was expecting.

“Although the Fair Work Commission has indicated that legislation should change to allow parties to seek relief from the impacts of the increase where adverse circumstances affect an employer, sector or particular geographical area, the increase is too high for our industry to cope with.

“The negative impact of the increase will be felt most acutely by operators of regional tourism accommodation businesses. Such small businesses face hardship because they will not be able to pay for the increase in wages – the largest expense for these businesses – by raising room-rates by a similar amount.

“Even though the commission stated the increase was moderated because of the superannuation guarantee rate increase (to 9.5 per cent from 1 July 2014), the quantum of it is too high. In some cases, it could result in accommodation businesses in regional areas closing.

The increase in the minimum wage could drive regional tourism companies in the Hunter Valley to the brink, according to Will Creedon from Visitor Economy Hunter.

“Every increase of the expenses that is unforeseen, brings more risk, brings uncertainty and it brings lack of confidence and there is no question again this week by this that it is another challenge,” said MrCreedon.

“Tourism in the Hunter, particularly mid week business and some weekend business has been under considerable hardship in relation to the expenses and this is just another expense and unfortunately we are competing against the cost structure of other countries like Fiji, Hawaii, etc,” he added.

Related Articles

0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
Back to top button
WP Tumblr Auto Publish Powered By : XYZScripts.com
AccomNews
0
Would love your thoughts, please comment.x
()
x