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Minimum wage increase ‘extremely harmful’ says ARA

 

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This week in retail has been dominated by talk about wages, with the Fair Work Commission (FWC) handing down decisions on both penalty rates and the minimum wage.

For a rundown on the changes to Sunday and public holiday penalty rates see our story here. And for insights into how you can best prepare for these changes, see this piece from Employsure’s Ed Mallett.

Minimum wage increase

The FWC announced on Tuesday that the national minimum wage will increase by $22.20 per week to $18.29 per hour. This is an increase of 3.3 per cent for Australia’s lowest-paid workers.

In a statement the FWC said its decision was influenced by current economic circumstances that “provide an opportunity to improve the relative living standards of the low paid and to enable them to better meet their needs”.

The panel, led by FWC president Justice Ian Ross, also said that consideration of international research on the impact of increases in minimum wages has “fortified our view that modest and regular wage increases do not result in disemployment effects”.

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It also acknowledged that the increase “will not lift all award-reliant employees out of poverty, particularly those households with dependent children and a single-wage earner” but said that granting an increase that would immediately life all full-time workers out of poverty “is likely to have adverse employment effects on those groups who are already marginalised in the labour market, with a corresponding impact on the vulnerability of households to poverty due to loss of employment or hours.”

Industry response: ARA

The Australian Retailers Association (ARA) is concerned the increase will stifle jobs growth within the retail sector, and said in a statement that its proposed increase of 1.2 per cent would have been the best way to preserve employment.

Executive director Russell Zimmerman said retailers are already facing a complex operating environment and this increase will be extremely harmful to the growth and stability of the Australian retail industry.

“[The] minimum wage increase of 3.3 per cent will supress the benefits achieved by the penalty rates reduction, negatively affecting increased trading hours for retailers and further delaying employment growth across the sector,” he said.

“With the inherent weakness in today’s economic climate, along with tax increases about to hit consumers, this upsetting increase will strongly impede on employment growth within the industry.”

Industry response: ACTU

The Australian Council of Trade Unions (ACTU) is also unhappy with the decision, believing the increase is not enough.

In a statement, the Union said the decision is “further evidence that the system is broken”.

ACTU secretary Sally McManus said the FWC “made a decision to keep working people in poverty”.

“It is now urgent that Australians’ wages are increased given wage growth in Australia is at a 76-year low, company profits are soaring, Treasury has banked on pay rises of 3.75 per cent, the cost of living is rising and 700,000 people are about to get a penalty rate cut.

“If our current rules can’t deliver a decent pay rise, then they need to change.”

In other news…

Retailer profile: We had a great chat with Tracey Bailey, founder of Brisbane-based Biome Eco Stores, about fighting a war on waste. Tracey started Australia’s first online eco store in 2003 and has gone on to do great things.

Shoppers want an Uber experience from retailers: Tech companies are leading the way when it comes to offering seamless customer experiences, but can traditional stores keep up? Retailers like Uk department store Selfridges are doing their best.

Wesfarmers will lose $400m to Amazon: In concerning news for the industry, investment bank Morgan Stanley believes Wesfarmers will suffer a $400 million hit to its earnings by 2026 due to the arrival of Amazon.

Catch of the Day rebrands, launches new marketplace: The deals site has had a name change and will welcome up to 300 new brands (including Speedo, North Face, Lorna Jane and Asus) to its new marketplace.

 

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