Australia's minimum wage hike prompts job loss warning

The decision to lift Australia’s minimum wage by $18.70 per week from July 1 has prompted mixed reactions, with retailers predicting job losses and unions calling for a higher wage.

The Australian Chamber of Commerce and Industry (ACCI) said today the decision will “destroy job opportunities and hit small-to-medium mum-and-dad businesses the hardest”.

ACCI CEO Kate Carnell said the economic reality was that “artificially high wages” destroy job opportunities.  

“These are the sorts of jobs that are often filled by the most vulnerable and low-paid workers, usually low-skilled and very sensitive to being priced out of existence by a one-size-fits-all approach by government.   

 “ACCI argued strongly before the Commission that a rise of more than $8.50 at this time would impose unworkable pressure on employers who are already suffering under very difficult economic conditions.”

The Australian Retail Association said businesses were already dealing with sluggish retail figures and low consumer confidence and the minimum wage hike would cause stress and damage.

In a statement, the association said it was “severely disappointed” by the wage rise.

Executive director Russell Zimmerman said the association had also condemned the FWC’s decision to abolish junior wage rates for 20-year-old employees earlier this year.

“For retailers to now be slammed with further costs through an increase to the minimum wage is simply unwarranted, and sadly, we expect to see many retail businesses reduce their staff further this year as a result.”

However, the Australian Council of Trade Unions was disappointed that the wage increase was less than the $27 per week it was calling for and it expressed concern about the widening gap between the minimum wage and average earnings.

The ACTU released a statement prior to the decision, saying that a $27 weekly pay rise was essential if Australia was to avoid following the US in creating an “underclass of working poor”.

ACTU secretary Dave Oliver told ABC that the wage decision was “particularly unfair” when the National Accounts figures showed stronger than expected economic growth.

The New Zealand Government raised the minimum wage from $13.75 per hour to $14.25 per hour in April.