Wage increase a blow to retailers

dollar,sign,money,ladder,currencyAfter securing adult wage rates for 20 year olds in A Fair Work Commission decision this month, the Shop Distributive and Allied Employees Association (SDA) is now keen to extend the decision to 18 and 19 year olds.

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The union’s policy is to extend the adult wage rate to all employees over 18 year of age, abolishing the current threshold of 70 per cent of adult wages for 18 year olds and 80 per cent for 19 years olds.

The adult wage push was opposed by peak retail organisations, arguing that the higher wage costs were forcing some retailers to close their doors or cut staffing numbers.

Retail employer bodies argue that higher wages for workers under 21 years of age could actually prevent them from getting jobs, as retailers faced with the same wage costs would be likely to opt for older applicants with experience.

The SDA claims that many 20 year olds are already paid at adult wage rates and that the Fair Work Commission decision will have little impact on the retail industry.

The union argues that all employees doing the same type of work should be paid at the same wage rate and that most ‘juniors’ do have the same tasks and responsibilities as older employees.

The increase for 20 year olds with at least six months service will be phased in lifting wages from 90 percent of the adult rate to 95% from July of this year and to 100% of the rate in 2015.

The SDA is already working on a new application to extend the latest decision to 18 and 19 year olds on the same principal of similar duties and responsibilities.

The decision has come at a difficult time for the retail industry, with many retailers reducing staff numbers and employing less casual staff on rosters.

High wage costs are one of the key factors blamed by retailers who have closed stores, including Dimmeys and Bevilles, which are both subject to reports in Inside Retail PREMIUM this week.

The decision also coincides with a push by the Australian Council of Trade Unions for a $27 increase in the minimum weekly wage to $649.

The Fair Work Commission agreed last year to a $15.80 weekly wage increase, but the ACTU claims that lower paid workers are falling further and further behind in their income.

In its submission to the Commission, the Australian Retailers Association (ARA) has recommended that any increase in the national minimum and award wages should be no more than $8.50 or 1.3 per cent this year.

Master Grocers Australia and Liquor Retailers Australia are arguing for a maximum 1.25 per cent increase in the minimum wage, while the National Retail Association is recommending a maximum 1.75 per cent increase offset by a 0.25 per cent increase in mandatory superannuation contributions paid by employers.

The Australian National Retailers Association (ANRA), which represents some of the largest retail chains, has recommended a maximum 1.4 per cent increase in minimum wages this year.

Russell Zimmerman, ARA executive director, said a 1.3 per cent increase would allow for expected inflation over the year to the September quarter 2014, while clawing back the over compensation for inflation provided in the past two minimum wage decisions.

“The ARA’s position preserves the value of the minimum wage over the last three years and our submission addresses the key considerations of Fair Work Commission when performing its wage setting functions.

“These considerations are to promote the economic prosperity of the people of Australia having regard to the capacity for the unemployed to obtain employment, as well as providing a safety net for the low paid and providing minimum wages for junior employees.

“The ARA’s submission has outlined the difficult trading environment existing for the retail sector,” Zimmerman said.

“With most small to medium retailers reliant on a minimum wage workforce, any move to increase wages within the sector during this time of low consumer confidence and low to negative growth will only further job losses currently underway within the sector.”

Zimmerman said it was no secret that the retail sector has been in a low to negative growth period during and the minimum wage decision should be a realistic and reasonable one that considers weak economic trading conditions.

In its submission, ANRA acknowledges that conditions in the retail sector improved in the second half of 2013 and have maintained momentum into 2014.

“However, this turnaround comes after four years of below average growth, which will take some time to fully recover from. Excessive wages pressure could put at risk recent gains made by the sector,” ANRA argues.

“ANRA urges the FWC to show restraint in its 2014 Annual Wage Review decision to allow the recovery to become more entrenched.”

Zimmerman described the adult wages decision as a “shock” that was “based on no evidence and will kill jobs for youth as well as hinder skills developments”.

With industrial relations and wages growth simmering on the political agenda despite the Prime Minister, Tony Abbott, arguing in last year’s election there would be no major changes to IR legislation, the retail industry associations are lobbying on the political front to head off Fair Work Commission decisions.

Zimmerman called on Employment Minister, Eric Abetz, to “do everything in his power” to halt the adult wages decision, especially with youth unemployment levels climbing”.

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