Employers call for limited minimum wage increase as businesses ‘struggle’

Employers have called for the minimum wage increase to be limited, citing higher costs and weak productivity growth.

Australian Industry Group chief executive Innes Willox. Picture: Kym Smith

Manufacturing employers have called for the minimum wage increase to be limited this year to $14.40-a-week, arguing businesses are “struggling” with higher costs and productivity growth is weak nationally.

Australian Industry Group chief executive Innes Willox said the modest two per cent rise was warranted given the economy had moved back into the slow lane and “looks set to stay there for some time”.

“While employment has been strong in recent years and is still holding up, deceleration is evident in business conditions, confidence, building approvals, retail sales, car sales and most crucially, job vacancies,’’ Mr Willox said.

He said company insolvencies increased through late 2018 in the construction, retail and hospitality industries.

“Businesses are struggling to cope with high and rising input costs, especially energy costs,’’ he said. “Also, productivity growth is weak nationally and in industries with mainly low-wage employees.

“Inflation remains weak which means that even a small rise in the minimum wage will deliver a real increase in household spending power.”

The $14.40-a-week claim is slightly higher than the $12.95-a-week rise proposed by the Australian Chamber of Commerce and Industry.

The ACTU, which is seeking a $43-a-week-rise, has criticised Restaurant and Catering Australia for proposing a zero increase.

Mr Willox said the ACTU claim, if granted, would inflict harm on businesses and low-paid workers.

“Now is not the time for risky movements in minimum wages,’’ he said.

“The minimum wage increases awarded by the Fair Work Commission in the last two annual wage reviews (3.3 per cent and 3.5 per cent respectively) were exceptionally high and out of step with overall wage movements and economic settings. It is essential that the increase awarded by the Panel this year is much more modest.”

He said low paid employees had benefited from tax changes introduced in last year’s federal Budget.

“The low and middle income tax offset has increased disposable incomes for many low wage earners,’’ he said.

“While the impacts vary across low and middle-income groups, the increase in disposable income for a person earning the current national minimum wage of $719.20 a week is 0.63 per cent which equates to a change in pre-tax income of $6 per week which is nearly one per cent.”