Minimum wage ruling a ‘mixed bag’ for retailers

The Fair Work Commission’s (FWC) wage review has determined a 2.5% increase to the minimum wage.

The increase to the minimum wage will take effect from 1 July, with a delayed commencement date for those under the General Retail Industry Award 2020 of 1 September 2021 and 1 November 2021 for those under the Hospitality Industry (General) Award 2020 and the Hair and Beauty Industry Award 2010.

The wage review decision has been described by the National Retail Association (NRA) as a “mixed bag” for retailers at a crucial point in the nation’s Covid-19 recovery. The Australian Retailers Association (ARA) has also expressed its disappointment.

Delay welcomed, but timing still a concern

NRA CEO Dominique Lamb says retailers welcomed the deferral for retail, hair, beauty and restaurant workers. They were, however, concerned that the increase did not conform with CPI.

“Retailers would have liked a more balanced approach that would have seen a more modest rise given there remains much uncertainty in the business community,” she says.

“The NRA was the loudest and most consistent voice out of any retail group, and we are glad that our strong advocacy defeated the ACTU claim for a job-destroying 3.5% rise.

“We absolutely want workers to receive a pay increase, but both the amount and the timing needs to be carefully considered. Australia is at a delicate point in its recovery from the Covid recession, which is why the NRA always believed that the prudent approach was an increase in line with CPI coming into effect in November 2021.”

In the ARA’s submission to the FWC, CEO Paul Zahra says it supported a decision to be made on the minimum wage this financial year, but that any increase should be in line with inflation and not take effect until 1 February 2022, due to uncertainty and the uneven recovery in retail.

“Whilst we appreciate the FWC delaying the increase for retailers, which is in line with the ARA’s advocacy, the timing of the increase remains a significant concern coming only months after the previous increase and just ahead of the critical Christmas trading period which is the most expansive employment period for retailers,” he says.

Lockdowns and JobKeeper

Ms Lamb adds that snap state lockdowns are still not a thing of the past and since the end of March businesses have not had the JobKeeper safety net.

“In 2021 we’ve seen numerous state governments plunge their economies into lockdown and on each occasion official ABS data reveals that retail turnover decreases,” she says.

“The NRA is grateful that the FWC clearly took a considered approach to its judgement, but we remain concerned about the impact the larger than expected rate may have on some businesses.”

In further comments, Mr Zahra says: “The federal injection of JobKeeper into the economy ended March 28 of this year with a significant reduction also in the JobSeeker stimulus. The economic impact of these changes cannot be determined until further data is made available in the coming months. What we do know is that whilst there has been overall retail growth, challenges remain for many small businesses.

“Businesses are still adjusting to the last wage increase on 1 February this year and face additional pressure when an increase to the Superannuation Guarantee increase kicks in from 1 July.

“Our economic recovery remains uneven, with many businesses – particularly small businesses in CBD locations, travel retail and in Victoria – continuing to struggle for survival. The Covid threat is also far from over, with 33 days of state-imposed lockdowns already in 2021 – as we’ve seen with the recent lockdown in Victoria which devastated businesses who couldn’t trade for two weeks.

“Small retail businesses and hospitality businesses continue to face Covid restrictions such as density quotients which restrict their ability to operate at full or profitable capacity whilst they now must absorb the full level of operating costs, including full rent and staff costs.”

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