Retailers will face rising cost pressures following the increase in the minimum wage announced by the Australian Fair Pay Commission.

Richard Evans, executive director of the Australian Retail Association (ARA) says that retailers are likely to pass the increase onto the consumers, as they are already under severe financial stress due to a drop in demand and the RBA’s attitude to demand driven control of inflation.

“This minimum wage increase will surely be passed onto consumers, who are already carrying the burden of increased petrol prices and rising interest rates. In addition, this wage rise will now threaten jobs because smaller retailers simply can’t absorb another blow,” says Evans.

A survey commissioned by the Australian National Retailers Association (ANRA) earlier this year found that close to 54 per cent of respondents’ first job was in retail.

“We understand the need to maintain incomes that will help low income households during this tough economic climate,” says ANRA CEO Margy Osmond.

“The reality is that retail sales growth has flat lined this year and businesses have responded by trying to cut costs. Any increase in the wages bill could deter retailers from putting on more staff. This wage increase is another cost that will need to be factored in by retailers who are already feeling the pinch.”

Osmond adds that there is an added risk that the Federal Government’s award modernisation process could further increase wages, which will put even more price pressure on retailers.