Wage decision bad for business

07 June, 2017

CCI has criticised the Fair Work Commission’s decision to increase the national minimum wage by $22.20 a week, saying it will hurt WA businesses already struggling.

The Commission’s decision will see the national minimum wage jump from $672.70 to $694.90 per week. 

All award rates of pay will be increased by 3.3 per cent, to be rounded to the nearest 10 cents, from the first full pay period that starts on or after 1 July 2017.

CCI advocated for a modest $8.10 per week increase or 1.2 per cent while the Australian Council of Trade Union (ACTU) sought a $45 per week increase.

The 3.3 per cent increase far outstrips inflation in WA, which currently stands at around one per cent.

In reaching its decision the FWC paid attention to the state of the national economy, concluding that real net disposable income had increase by 6.8 per cent, labour productivity had improved, profit growth was stronger and real Gross Domestic Product had increased over the year.

However much of this improvement had arisen out of the NSW and Victorian economies.

CCI Director of Advocacy Cath Langmead says the FWC’s decision showed a distinct lack of understanding of the conditions WA businesses face.

“(The) decision from the Fair Work Commission does not reflect the challenging conditions faced by many businesses in WA and across the country,” she says.

“Of all the states, only New South Wales has an unemployment rate that is below the national average – all other states are struggling with an above average jobless rate, and the decision will make it harder for small businesses nationwide to grow their operations, create jobs and offer hours for workers.

“CCI and the WA business community urge the Fair Work Commission to act as a truly national body and consider conditions in all economies during their decision-making process.”

Langmead says the FWC’s decision would force WA businesses to find savings by decreasing hours available for workers.

“With the WA underemployment rate at 10.4 per cent and the jobless rate still stubbornly high at 5.9 per cent, now is not the time to make it harder for WA businesses to create jobs, but that is exactly what the decision will do,” she says.

Langmead says given difficult conditions throughout the WA economy, businesses will be unable to pass the increased cost burden on to customers, which means savings will have to be found another way.

She says it will likely be a reduction in hours offered to workers – particularly young people, who typically work in part-time and casual roles.

“WA businesses in the retail and hospitality sectors will also be especially disappointed – for the next financial year, today’s decision will completely negate the benefits of reducing Sunday and Public Holiday rates for these sectors, making it harder for retail and hospitality businesses to offer more employment opportunities for workers,” she says.

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