Small retailers ‘hit hardest’ by IR regime

Small retailers are suffering the most from Australia’s labour laws, according to industry groups, despite a high-profile attack by larger retailers on the Federal Government’s workplace regime.

Retail giants Woolworths, Myer and Westfield have criticised the government’s award modernisation process claiming it is damaging the economy and could lead to job losses.

Westfield has argued that high labour costs are leading to an inevitable increase in retail prices, ultimately threatening jobs in the struggling sector.

According to Westfield, minimum wages for workers in Australia are among the highest in the world, and 110% higher than in the United States.

Meanwhile, Myer chief Bernie Brookes has accused the Gillard government of labour market restrictions, while the Opposition is “noticeable by their absence from the argument”.

The retail award was modernised as part of Labor’s overhaul of award conditions and boosted penalty rates.

The wage rates in the modern retail award are higher than the minimum wage, with penalty rates of typically $43.25 for public holidays, $34.60 for Sundays and $21.63 after 6pm.

While retail giants argue their case, it’s the plight of smaller retailers that has retail groups most concerned.

The Australian Retailers Association says some businesses could pay the ultimate price.

“Retailers will feel the biggest impact of the wage increase with the shop assistant rate increasing by over $21 per week,” ARA executive director Zimmerman says.

“Small to medium businesses will be hit the hardest. Many of the bigger companies are protected from the rise due to the enterprise bargaining agreements they have in place.”

“Meanwhile, the smaller players are facing the same struggles as Australian workers with interest rate increases, more taxes, increased utility bills and a higher cost of living. Many will simply have to close their doors.”

Gary Black, executive director of the National Retail Association, said over a five-year transition, the award modernisation process was responsible for yearly wage increases of 2%, while minimum wage rulings would lead to further rises of 4%.

“It’s a significant factor contributing to the demise of some retailers or contributing to the contraction of the industry and the closure of stores,” Black said in a statement.

The warnings come as show treasurer Joe Hockey prepares to deliver a speech today calling for greater flexibility in industrial relations.