Limit wage rise for low-paid, small business urges

Small business has called for this year’s minimum and award wage increase for 2.9 million workers to be capped at 3 per cent.

The Council of Small Business Organisations Australia says sector enduring a ‘cost of doing business crisis’

Small business has called for this year’s minimum and award wage increase for 2.9 million workers to be capped at 3 per cent, warning the sector was enduring a “cost-of-doing-business crisis”.

The Council of Small Business Organisations Australia also called for a small-business representative to be appointed to the Fair Work Commission’s annual wage review panel “to ensure that the complexities and challenges facing Australia’s largest private employer are duly considered”.

In its submission to the panel, the COSBOA cited research by the Australian Small and Family Business Ombudsman that found 43 per cent of small businesses were not making a profit, and a majority were paying themselves below average annual earnings while working more than 39 hours per week.

“Small businesses are enduring a cost-of-doing-business crisis,” the submission says. “Inflation has rightly been described as a drag on jobs, productivity and real wages. For small businesses, the reality is that higher costs undermine viability, dissuade employment and typically result in higher prices for consumers.

“Small businesses are facing a perfect storm with rising energy, rent, insurance, borrowing, transport and supply-chain costs.”

The Fair Work Commission last year increased the minimum wage by 8.6 per cent and award rates by 5.75 per cent. Unions are seeking a 5 per cent rise this year.

The COSBOA submission says that for many small businesses, especially those in labour-intensive industries including hospitality and food service, labour costs can represent 40 per cent or more of their overall operating costs.

Higher wage costs have also been driven by migration policy, specifically the significant increase to the Temporary Skilled Migration Income Threshold from $53,900 to $70,000.

“In many sectors, such as hairdressing and beauty services, this revised TSMIT is higher than the average annual earnings, meaning small employers have effectively been priced out or have paid elevated rates to secure overseas workers,” the submission says.

According to the COSBOA, a legislated $50 increase in wages adds approximately $59 in direct costs per week to the small business. “Penalty rates on public holidays can amount to 250 per cent, meaning an increase of, say, 4 per cent in the legislated rate is in reality a 10 per cent increase in wages during those trading hour.

“It is easy for the government to call for higher award rates when someone else is paying … As the RBA continues to target inflation between 2 to 3 per cent, COSBOA considers that any legislated wage increases should be within this range as well.”