Finance Work Australian businesses call for cut to minimum wage

Australian businesses call for cut to minimum wage

Retail workers may be in for a pay cut, if employers get their way.
Retail workers may be in for a pay cut, if employers get their way. Photo: AAP
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Australians on the minimum wage hoping for a boost to their wages this year may be sorely disappointed if certain employer lobby groups get their way.

The National Retail Association and the Restaurant and Catering Industry Association of Australia took the controversial step on Tuesday of calling on the Fair Work Commission to keep the minimum wage flat at $18.29.

That may not sound surprising, given both groups represent two industries – retail and hospitality – that often pay no more than minimum wage.

But it puts them at odds with the wider business community. Most business groups acknowledge that minimum wages need to rise in order to keep up with inflation – currently 1.9 per cent.

If inflation goes up by 1.9 per cent a year, but the minimum wage stays the same, then those on the minimum wage take a de facto pay cut.

On Tuesday the Fair Work Commission published 15 submissions to its annual minimum wage review, 11 of which were from industry groups.

Of those, the single biggest group – comprising four employer groups – called for a rise of “no more than” 1.9 per cent, in line with inflation.

Among these was the Australian Chamber of Commerce and Industry, the peak body for Australian business as a whole.

It also included the Australian Retailers Association, which has similar constituents to the National Retail Association.

The Master Grocers Association, which represents food retailers, called for a below-inflation increase of 1.1 per cent, which would also be a pay cut in real terms.

At the other end of the spectrum, the Australian Council of Trade Unions called for an increase of 7.2 per cent – almost three times inflation.

Rationale for cutting pay

So how did the retail and hospitality lobby justify cutting the minimum wage in real terms?

The National Retail Association gave two reasons. One was that the awards covering the retail and fast food industry changed this year to entitle casual employees to receive higher overtime rates.

The NRA claimed this decision was rushed through by the Fair Work Commission too quickly, catching retailers by surprise.

“As such, the NRA considers it highly likely that this level of haste has led to inefficiencies in the allocation of labour that have resulted, at least in the retail and fast food sectors, in a hidden increase in the average wage,” the submission argued.

The second reason related to the notoriously difficult business conditions facing the Australian retail industry.

“During environments such as these, it is vital that retail businesses do not have conditions imposed on them that make it more difficult to operate,” the NRA said.

Restaurant and Catering Industry, meanwhile, argued that raising the minimum wage would harm jobs, making it more difficult to hire people on a full-time basis.

It also argued that last year’s increase of 3.3 per cent was “higher than necessary”.

The group also said an increase in the minimum would be bad for profits.

“RCI argues that another significant increase in the minimum wage will adversely affect the ability of businesses within the café, restaurant and catering sector to operate profitably.”

At the other end of town …

The union movement, as represented by peak body the ACTU, argued for a 7.2 per cent increase. This high figure fits with the union movement’s established position that Australian workers need a “living wage” as opposed to a “minimum wage”.

“Australia needs a living wage. The wage earnings of employees dependent on minimum rates of pay have fallen below their long-term level relative to market wages,” the ACTU said.

“This is not a marker of a fair society, particularly when workers and their families are forced to live in poverty.”

The Fair Work Commission will carry out it its final consultation in May before making a decision for the new financial year, which begins on July 1.

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