GAWLER’S peak business group has warned struggling local retailers may cut hours or workforce numbers after the Fair Work Commission delivered a national minimum wage increase last week.
Gawler Business Development Group liaison and marketing co-ordinator Caren Brougham said local businesses will be forced to absorb higher wages after the workplace overseer lifted the minimum wage by $22.20 a week – an extra 59 cents an hour.
She said, while the move has been welcomed by the region’s lowest paid workers, it could place further financial strain on businesses that are struggling to remain viable.
“$22 per week is not a lot of money per individual, but once you apply that extra cost to a business with 10 or 20 employees across 12 months, it mounts up and detracts from the bottom line considerably,” Mrs Brougham said.
“The increase is quite small and whilst proponents of minimum wage increases have argued that such increases can serve as an engine of economic growth and assist low-skilled individuals during downturns in the business cycle, there is no evidence to demonstrate that it will stimulate economic growth.
“It could have an adverse effect if a business is already struggling as it may be forced to reduce hours allocated to staff.”
However, SA Unions State Secretary Joe Szakacs said the “pathetic” pay rise – coupled with penalty rate cuts coming on July 1 – means that many workers will still lose money from their weekly pay.
“We know that the average retail and hospitality worker will lose $2400 a year when penalty rates are cut, so the decision today by the Fair Work Commission to raise wages by $1155 a year means they’re going backwards,” he said.
“Our system is broken if Fair Work can so easily condemn our already lowest paid workers to more hardship.
“As the minimum wage falls further and further behind average wages, all workers on awards have reason to worry.”
Mr Szakacs said national economic data for the year to March shows business in Australia is booming, with profits up 39.7 per cent, while wages growth is a dismal 0.9 per cent.
“We have record low wage-growth in Australia and a slowing economy.
“Cutting wages will do nothing to stimulate economic activity.”