Retailers are expected to be negatively impacted by the Fair Work Commission’s decision to raise the minimum wage.
Australia’s 1.5 million lowest paid workers will get an $18.70 a week pay rise.
The increase falls below the $27 per week rise the Australian Council of Trade Unions (ACTU) argues is necessary to avoid creating an underclass of working poor, but will disappoint business groups who argue they can only afford an extra $8.
Both the National Retail Association (NRA) and Australian Retailer’s Association (ARA) have lamented the three per cent increase.
The rise follows an increase of 2.6 per cent in July 2013 and comes on top of two other new costs effective on July 1 – an increase in the compulsory superannuation rate and increases to some loadings including penalty rates under the last step of transitioning to the Modern Awards.
NRA CEO, Trevor Evans, said the decision will be a major impost to a sector only beginning to show gradual signs of recovery.
“In this environment there is virtually zero capacity for most retail employers to pass on additional cost increases to their customers,” Evans said.
“Some will have to reduce staff numbers or cut hours amid the often unavoidable trade off between jobs and wage increases that aren’t strongly linked to productivity or efficiency gains.”
ARA executive director, Russell Zimmerman, said the increase, which takes effect from the first full pay period after July 1, 2014, will increase the full time Retail Employee Level 1 rate to $703.90 per week (or $18.52 per hour).
“With most small to medium retailers being reliant on a minimum wage workforce under the General Retail Award, any move to increase wages within the sector during this time of low consumer confidence and low growth will only further job losses currently underway within the sector – a very distressing truth for retailers,” Zimmerman said.
“The ARA advocated before the tribunal a realistic and manageable minimum wage increase of no more than $8.50 or 1.3 percent in the 2014 Minimum Wage Review.
“The retail industry makes a significant contribution to the overall state of the national economy and employs more people (including more juniors) in Australia than any other private sector industry. It is more reliant on pay scales than any other industry, and also suffers a higher disproportionate effect in minimum wage increases than other industries due to deregulated trading hours and penalties across all retail awards.
The three per cent increase will be applied to industry awards including those covering the retail, fast food and the hair and beauty sectors.
