Union pay rise push will hurt small business, claims ACCI

Australian Chamber of Commerce and Industry claims a union push for a $28-a-week pay rise for employees will add $3.6 billion to the wage bills of struggling small businesses.

Last month, the Australian Council of Trade Unions announced its plan to seek a flat-dollar pay rise of $28 a week, which would lift the weekly pay packet for a minimum-wage worker from $569.90 to $597.90.

Last year, Fair Work Australia awarded a pay rise of $26 a week – $1 less sought by the ACTU – after a pay freeze in 2009 due to the economic downturn.

ACTU secretary Jeff Lawrence has described the latest claim as modest, but says it will ensure more than one million workers share in Australia’s wealth.

However, the ACCI will tell the Fair Work Australia Minimum Wage Panel today that another sizeable increase to award wages will weaken the already-struggling small business sector.

The ACCI will also present new evidence showing last year’s $26-a-week pay rise not only had a negative impact on small business profitability but also hit employees due to reduced working hours and fewer opportunities for casuals.

“Our central argument in this week’s hearing is that last year’s record $26 per week increase is no starting point for this year’s case,” ACCI chief executive Peter Anderson says.

“Not only does the evidence show it damaged employers and employees in small business, but it came on the back of an 18-month wage pause during the global financial crisis.”

“This year the opposite applies – the ink has hardly being dry on a record increase that is still flowing through payrolls.”

In its submission to the Minimum Wage Panel, the ACCI says an increase of $9.50 to the minimum wage, with carve-outs, adequately compensates low income earners against rising living costs.

“A $9.50 rise with carve-outs for disaster affected regions and underperforming industries is the fairest result,” Anderson says.

“Wage reviews are not just about wage rises and the cost of living, but also about jobs, the pressure on small and medium employers, and the integrity of a wage system that intended most rises to occur through productivity bargaining.”

“Unfunded wage rises fuel inflation. In a low productivity environment that makes it more likely the Reserve Bank lifts interest rates.”

“Last week’s Federal budget already forecast inflation at the top of the Reserve Bank’s target range. An interest rate rise that eats up a wage rise is no benefit to anyone.”

The Australian Retailers Association has submitted to the review calling for special consideration of retail conditions and an exemption of General Retail Award-reliant businesses from any minimum wage increase.

“Lumping the retail sector in the same category as other award-reliant industries is unreasonable considering the retailers are operating in the slowest gear of a two-speed economy,” ARA executive director Russell Zimmerman said in a statement.

“It’s entirely suitable for the Minimum Wage Panel to acknowledge particular circumstances of individual industries.”

Meanwhile, Australian Industry Group believes the national minimum wage should only be increased by $14 in order to assist low paid workers without hurting the economy.

AIG is, however, calling for exceptional circumstances to be invoked for employers badly affected by the recent natural disasters.