An open letter to Sally McManus – secretary of the ACTU

time sheet, pay, wageDear Sally,

You have recently argued that a $50 minimum wage increase is necessary while acknowledging that many people on the minimum wage are in the hospitality and retail industries. 

I am not sure whether you read the article the following day “Nearly 1500 retail businesses ‘at risk’ of imminent collapse”.

Does it occur to you that there is a disconnect between these two articles?

Most retail businesses – and others I daresay – have a KPI which measures wages as a percentage of sales.

Now if you flick to the Australian Retail Association you will notice that on 14 March they reported timid post-Christmas trade, with a 2.09 per cent total growth year-on-year.

What does this tell you Sally?  

If you are demanding a wage increase of over 7 per cent and sales are rising by 2 per cent, there is a shortfall of 5 per cent or your wages are going to blow out.

So what do you think will happen?

Retailers will have to cut numbers – again – providing less opportunities for those at the bottom of the food chain.

Sally, you will be familiar with the internet and the increase in retail sales through this channel. You will have noted that the bricks and mortar retail industry is under siege.

Why would anybody or any organisation in their right minds push for ludicrous self defeating increases?

Are you and your cronies intent on driving the retail trade where you drove the manufacturing industry in Australia? It really isn’t hard to do. Just keep on with your work. Ask any ex Toyota, Ford, Holden worker and they will provide you with first hand proof that what you are doing works incredibly well.

Regards,

Stuart

Stuart Bennie is a retail consultant at Impact Retailing www.impactretailing.com.au and can be contacted at [email protected] or +61 414 631 702 or +61 2 4377 1111

Comments

4 comments

  1. Markq posted on March 16, 2018

    Good letter Stuart, bet you don't get a reply reply

    • Stuart Bennie posted on March 16, 2018

      Thanks Mark, Sadly I agree with you so no bets !!! reply

  2. Robert Jarmyn posted on March 16, 2018

    It is an interesting dilemma. Despite the increase in the number of people buying online it still only represents a small proportion of total overall retail sales. The biggest issues facing retail at the moment is lack of consumer spending and the cause of that is lack of wages growth. Over the past 12 months wages growth has been flagging behind inflation. Ask any consumer goods supplier and they will tell you that their costs are continuing to increase yet they are being forced by retailers to reduce their prices. The root cause of this is the dumping of cheap goods in the Australian market by Chinese manufacturers. Lets face it Made in China (aka K-mart) has educated consumers that t-shirts should only cost $5. This is great for consumers but it is killing retail profitability. A 100% mark up on a $2.5 shirt is only $2.5 whereas a 100% mark up on a $5 shirt is $5. Thus retailers who push Chinese goods are effectively creating deflation which in turn leaves less funds available to spend on fixed costs like wages and rent that aren't subject to the deflationary pressures of China (in fact the opposite as Chinese investors have pushed real estate prices up using their new found wealth) reply

  3. Mike Leask posted on March 18, 2018

    The detrimental impact of online retailers is not on sales figures or growth, but more on margins, as retailers seek to compete with cheaper prices from online competitors. The impact of a loss in profitability is to seek efficiencies from one or a combination of the following - 1) Reduce cost of goods sold by buying cheaper products and hope to increase volumes. 2) Reduce fixed costs like utilities and rents (ever seen rents go down?? And power bills are going up!) end result is closure of stores. 3) Reduce variable costs such as wages but if the wage rates are going up, the only answer is to reduce staffing by thinning rosters or by automating where possible. What the Unions need to realise is that wages growth comes from productivity increases, not from government mandates that increase the price of labour. As with the manufacturing industry, if you squeeze tight enough and long enough, you may end up with a mouth full of pips! reply

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