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FWC raises minimum wage, retailers to foot $2.2b bill

Millions of Australians will be be given a pay rise after the Fair Work Commission increased the minimum wage by 3 per cent, costing businesses around $2.2 billion. 

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The commission’s annual review on Thursday saw the minimum wage increase to $740.80 a week or $19.49 per hour, giving workers an additional $21.60 a week.

The ruling will apply to all workers who are covered by the national minimum wage, amounting to more than 2.2 million employees.

Employsure’s director of workplace relations Ed Mallett warned that the move could see the yearly wage bill for Australian businesses increase up to $2.2 billion while small business will be disproportionately affected.

“Most SMEs won’t be charging customers 3 percent extra from 1 July; but will need to come up with an extra $21.60 per week per employee, and many simply need support,” he said.

The National Retailer Association (NRA) on Thursday flagged concerns about the increase, with the peak’s CEO Dominique Lamb saying that it extends far beyond what they had hoped for.

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“The NRA remains concerned that the challenging period experienced by the sector is not over, which is why we advocated for a minimum wage increase of no more than 1.8 per cent,” Ms Lamb said.

“We support a minimum wage that strikes the right balance between fairness and affordability, which is why we had cautioned the FWC against setting the new wage too high as it could cost jobs.”

In March and April of this year the NRA made two submissions to the FWC calling for the minimum wage to be capped at 1.8 per cent, equivalent to CPI as at December 2018.

Despite echoing concerns about the impact of the wage rise on Australia’s struggling retailers, Ms Lamb commended the Commission for keeping the increase below 6 per cent.

“Although we remain wary about the impact this rise may have on mum-and-dad small businesses, we most certainly welcome the fact that the FWC strongly rejected the job-destroying increase of 6 per cent proposed by the ACTU,” she said.

While it is too early to say just how the rise will impact retailers, Ms Lamb says tax relief is nonetheless essential to help retailers absorb the cost of the increase.

“The economy does seem to have rebounded since the federal election with consumers clearly feeling a greater sense of certainty, however it is still too early to tell if this is just a temporary sugar-hit. It is for this reason that the Government should make tax cuts a priority on its agenda when parliament next sits,” she said.

The increase will take effect from the first full pay period commencing after 1 July 2019.

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