Retailers in Australia are facing potential financial hardship after the Minimum Wage Panel announced plans to increase the national minimum wage by 3 per cent.
National industry representative the Australian Retailers Association (ARA) expressed disappointment in the panel’s decision, released on June 4.
ARA Executive Director Russell Zimmerman explained that while this increase may sounds small, it will add significant stress to Australian retailers already struggling in a tough economic climate.
“This minimum wage increase, together with sluggish retail trade figures and penalty rate rises under Fair Work Commission awards, will only cause further damage to retailers who are struggling to keep their heads above water as it is,” he said.
When the increase comes into effect on July 1 this year, the full-time Retail Employee Level 1 wage rate is expected to climb to $703.90 per week, the equivalent of $18.52 per hour.
“With most small to medium retailers being reliant on a minimum wage workforce under the General Retail Award, any move to increase wages within the sector during this time of low consumer confidence and low growth will only further job losses currently underway within the sector – a very distressing truth for retailers,” Mr Zimmerman continued.
The ARA had previously supported a minimum wage increase, as long as the rise was kept under 1.3 per cent. This muted increase would have been more in line with productivity growth over the past 12 months, according to ARA figures.
“Productivity growth over the year to the March quarter was 2.7 percent, and there have been many periods in recent years when it has been higher and sometimes lower. Productivity growth of 2.7 percent is simply in line with the average pace of expansion seen over the last five years,” said Mr Zimmerman.
What you can do
Responding to the minimum wage increase may require many business owners to change their current retail strategy, to access greater profits and increased productivity.
If you’re concerned about how this decision will impact on your store’s finances, or would like guidance on the best action to take, contact a retail consultancy service for more information.