Minimum wage increase will stifle jobs growth

Retail associations have hit back at the Fair Work Commission’s decision to increase the minimum wage by 3.5 per cent, arguing it will stifle jobs growth within the sector.

The Fair Work Commission announced on Friday the minimum wage will increase to $719.20 per week from 1 July, or $18.93 per hour.

The General Retail Industry Award will increase to $789.90 a week, or $20.79 an hour for full-time and part-time employees, and $25.98 an hour for casuals.

This is almost double the 1.9 per cent increase sought by the Australian Retailers Association (ARA), and executive director Russell Zimmerman says it would put the brakes on employment.

He says retailers already face an unsteady trading environment, with monthly retail sales growth at around 2 per cent. “With retailers already struggling to keep their heads above water, [the] 3.5 per cent minimum wage increase will stifle retail growth and delay staff employment across the sector,” he says.

“The ARA [is] passionate about maintaining a sustainable wage growth and would like to see retailers given the chance to not only invest in their business, but invest in employment to promote retail as a vibrant career choice for all Australians.

“[The] minimum wage increase is well above inflation, putting the brakes on employment and innovation throughout the industry, which is detrimental for the retail sector.”

National Retail Association CEO Dominique Lamb agrees the rise will force retailers to scale back staff hours.

“The decision by the Fair Work Commission is disappointing considering the difficult retail environment at present,” she says. “Many retailers are confronting extraordinarily challenging trading conditions, and they are crying out for help.

“This is the biggest increase in the minimum wage in recent memory and we are concerned that it will result in fewer jobs in retail.”

When announcing the decision, Fair Work Commission president Iain Ross said the increase was part of planned modest and regular increases designed not to discourage employment growth.

“The circumstances are such that it is appropriate to provide a real wage increase to those employees who have their wages set by the national minimum wage or by a modern award,” he said.

“…such an increase will mean an improvement in the real wages of those employees reliant on the national minimum wage and modern award minimum wages and will, absent any negative tax transfer effect, result in an improvement in their living standards.”

The rise fell well short of the $50 per week increase sought by unions, but Australian Council of Trade Unions (ACTU) secretary Sally McManus says it is a “welcome reprieve” for low paid workers. 

“This increase is a step in the right direction, and takes us closer to our goal of 60 per cent of the median wage,” she says.

By Ruth Cooper