COSBOA: Cap minimum wage increase at 3% in “cost of doing business” crisis

The minimum wage should not rise any more than 3% as small businesses slog through a “cost of doing business crisis”, says the Council of Small Business Organisations Australia (COSBOA).

In its submission to the Fair Work Commission’s annual minimum wage review, the peak body said lingering economic difficulties, and the ongoing shock of 2023’s wage increases, should deter any minimum wage increases above the inflation rate.

While the Reserve Bank attempts to wrestle the inflation rate down from 3.4% to its 2%-3% target band, “COSBOA considers that any legislated wage increases should be within this range as well for this year’s determination,” COSBOA CEO Luke Achterstraat said in the submission.

COSBOA’s preferred 3% increase to the minimum wage and base award rates would undercut the federal government’s recommendation that wage increases should at least match the inflation rate, ensuring wages do not go “backwards” in real terms.

Reflecting on last year’s effective minimum wage hike of 8.6%, and an award rate lift of 5.75%, Achterstraat said small businesses are already absorbing knock-on costs through increased superannuation guarantee payments, worker’s compensation, and payroll tax.

In effect, a “legislated $50 increase in wages adds approximately $59 in direct costs per week to the small business,” Achterstraat said.

Separate adjustments to the Temporary Skilled Migration Income Threshold in 2023 have lifted the floor that small businesses need to pay overseas talent, Achterstraat continued, further bumping payroll expenses among many businesses.

COSBOA also wants a small business representative embedded in the Fair Work Wage Determination Panel.

Achterstraat, who was recently appointed to the Jobs and Skills Australia ministerial advisory board, said a small business voice on the panel would “ensure that the complexities and challenges facing Australia’s largest private employer are duly considered”.