The retail industry is set to face "disastrous" consequences following a decision by Fair Work Australia (FWA) to increase the minimum wage, according to The Australian Retailers Association (ARA).
The ruling by FWA, announced as part of this year’s annual wage review, will see modern award minimum wages for a range of sectors, including retail, increased by 3.4 per cent or $19.40 per week. The wage rise, which will come into effect from July 1, takes minimum pay to $589.30 per week or $15.51 per hour.
Fair Work noted in its decision that “the economy is performing reasonably well” and “in the circumstances a significant increase is appropriate which will improve the real value of award wages and assist the living standards of the low paid”.
However, ARA executive director Russell Zimmerman, has labelled the ruling as thoughtless and said that the blanket decision, lumping retailers in with other award- reliant sectors, shows a total disregard for the bleak trading conditions of Australia’s largest employer and will result in job cuts.
“Instead of paying heed to the already tough trading conditions specific to the sector, retailers will feel the biggest impact of the wage increase with the shop assistant rate increasing by over $21 per week,” he said.
“Small to medium businesses will be hit the hardest. Many of the bigger companies are protected from the rise due to the EBA’s 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.”
Zimmerman also stressed that retailers, who are already facing wage increases as of next month with the second transition to the Modern Award, will be forced to shed staff as a result of the double increase.
“FWA’s decision has disregarded the fact that we are operating in a two speed economy, with retailers traveling in the slowest gear and pitted up against the booming mining sector,” he said.
“The decision is disastrous for retailers and it’s unreasonable to expect them to pay increased wage bills while the sector struggles to post any significant growth and when retailers are already facing wage increases as of July 1 with the second transition to the Modern Award.”