The Australian Retailers Association (ARA) says the decision by the Fair Work Commission to increase modern award rates of pay by 5.75% – in addition to the scheduled 0.5% increase in superannuation guarantee – will place significant pressure on struggling retailers, particularly small businesses.
ARA CEO Paul Zahra said the scale of this increase will be difficult for many Australian retailers to absorb, particularly given there are no productivity improvements gained.
“We’re experiencing a cost-of-living crisis – so it’s important that wages continue to grow; but we’re also continuing to experience a cost-of-doing-business crisis so it’s a very delicate balancing act to keep business operating sustainably,” he said.
“Many retailers are under enormous financial pressure, with rising operating costs across the board. Supply chain costs have increased, utilities have increased, rent has increased, materials have increased and now labour will increase substantially.
“This is before factoring in that discretionary spending is softening – leaving many retailers concerned about operating costs.
“We fear the scale of this increase will tip some businesses over the edge – especially smaller retailers who are on very slim profit margins or in some cases in negative cashflow territory,” Mr Zahra said.
He said while inflation remains high, we should also be accounting for future conditions, such as the inevitability that inflation will come back down.
“The Reserve Bank’s message [last] week included a warning that the moderation of wages over the period ahead is crucial to prevent a wage, price spiral,” he said.
“There will need to be a labour productivity improvement to mitigate against the impact of this very significant rise to avoid job losses in an otherwise challenging year.
“We look forward to expected discussions with the government around review of the General Retail Industry Award to deliver much-needed productivity gains,” Mr Zahra said.
Woolworths to pass through wage increase
In a note to team members, WOW CEO Brad Banducci said, “We confirm that we will pass on all of this increase to our hourly paid team members in Supermarkets, Metro, CFCs and BIG W effective Monday, 3 July 2023. Team members will see this in their payslips in their next pay cycle.”
“This increase equates to a weekly uplift of at least $51.00 (based on 38 hours per week) for our Supermarkets, Metro, CFCs & BIG W teams. Updated wage rate sheets will be available on the portal as soon as possible,” Mr Banducci said.
“Separately, the superannuation guarantee rate will also increase from 10.5% to 11% from 1 July 2023.”
“We know that inflation and cost of living pressures are top of mind for you. We are pleased that this will make a meaningful contribution to the wages of over 145,000 hourly paid Retail Agreement covered team members who work tirelessly across our business to put our customers first,” Mr Banducci said.
“Thank you on behalf of myself and the Woolworths leadership team for your care and dedication to our customers and the communities we serve.”