Retailers react to wage hike

time sheet, pay, wageThe Fair Work Commission has announced a minimum wage rise of 2.5 per cent, compared to a three per cent increase last year, with the Australian Retailers Assocation (ARA) now voicing its concerns over the impact the $16 a week increase will have on the industry.

From 1 July 2015, the National Minimum Wage will increase to $656.92 per week, or $17.29 per hour.

Executive director, Russell Zimmerman, said the ARA advocated before the tribunal a realistic and manageable minimum wage increase of no more than $5.70 per week for the retail sector.

“We are obviously concerned about the effects this decision will have on retailers,” Zimmerman said.

“Retailers and young Australians have been reliant on pay rates to enable retail to bring on low skilled young staff and increase their skill levels, reducing youth unemployment.

“Many small to medium enterprise retailers are reliant on a minimum wage workforce, and the announcement today to increase wages during this time of low consumer confidence and low growth will sadly result in further job losses and business closures – a very distressing truth for retailers.

“The minimum wage increase, coupled with weak trade figures and penalty rates, will only cause further damage to retailers who are struggling to keep their heads above water as it is. While interest rates are currently at a record low (with the Reserve Bank of Australia today deciding to keep rates on hold at 2.0 percent) and there is support from the recently released Federal Budget, the retail industry cannot simply keep up with excessive wage increases.

“The ACTU and SDA aren’t about creating jobs and opportunity but they now appear to be on a low productivity/high wages rampage which will only harm retailers and their employees,” Zimmerman said.

The National Retail Association (NRA) said the 2.5 per cent national minimum wage increase did not reflect the reality of employment and business conditions for Australian retailers.

NRA CEO, Trevor Evans, said the increase awarded was particularly disappointing in an environment where youth unemployment is growing at an alarming rate.

“At a time when the Australian retail industry is only just returning to average sales growth on the back of a long period of incredibly challenging times, today’s increase will only hinder businesses,” Evans said.

“Australian business owners are already dealing with some of the highest wages in the world, in addition to irregular shop leasing agreements, which vary from state to state, causing confusion and adding unnecessary costs and regulatory burden to retailers.

“This decision is even more concerning given that the Commission acknowledged concerns about suppressed economic growth and rising unemployment.

“Many businesses will be held back from increasing staff numbers or hours, amid the often unavoidable trade-off between jobs and wage increases that aren’t strongly linked to productivity or efficiency gains. It comes at a time when retail employers are facing unprecedented competition from online, overseas-based retailers,” he said.

The 2.5 per cent increase will be applied to industry awards including those covering the retail, fast food, and the hair and beauty sectors.

“This policy decision could be damaging for businesses, workers and consumers, considering the uncertainty of the sector’s performance in recent times.

“Coupled with other cost burdens, the rise could end up having the opposite of its desired effect by leading to an overall reduction in employment levels, leavingsome workers worse off in the long run.”

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