Final minimum wage rise brings fresh struggle to recovering SMEs

Published January 27, 2021 (last updated January 25, 2022) -
Min Wage Group 3

Employsure, Australia’s largest workplace relations advisor, urges employers covered under Group 3 Awards to ensure they’ve updated their payroll, to reflect the increase to minimum wages.

From the first full pay cycle on or after 1 July 2020, the national minimum wage increased by 1.75% per cent to $19.84 per hour, a $0.35 hourly rate rise for full time employees paid the national minimum wage. In other words, a full-time employee now receives a $753.80 per week, an increase of $13.00. The new minimum wages for the final award group (Group 3) starts from 1 February 2021 and covers services such as Accommodation and Food; Arts and Recreation; Aviation; Retail and Tourism amongst others.

“As businesses try to recover from the economic impact COVID-19 has had on them, this increase comes at a time of great uncertainty,” said Employsure Managing Director Ed Mallett.

“What we’ve seen in recent weeks, particularly in greater Brisbane and on Sydney’s northern beaches, is the possibility of snap lockdowns every time a case of the virus is recorded in the community. These throw a massive spanner in the works for SMEs that have to close up shop, with no guarantee restrictions won’t be extended. Losing money from closing, coupled with an increase to the minimum wage, is a recipe for disaster.

“Thousands of businesses who were also on the original JobKeeper wage subsidy scheme are now either no longer eligible, or are on the new reduced payment. For a lot of them, they simply can’t afford it. Some of our clients have told us they haven’t fully recovered financially, and sadly, some have closed as a result.”

Understanding minimum wages in Australia is one of many crucial elements an employer should be aware of when running a business. Employers and employees cannot legally be paid less than their applicable minimum wage, even if they agree to it.

When it comes to an employee’s minimum wage, their minimum entitlements under the relevant Award or agreement need to also be factored in. These entitlements are set apart across a variety of factors such as industry, job type and experience in the role, and are therefore important for employers to understand and abide by.

The wage increase will have an administrative and financial impact on the bottom line, as it does every year. However, businesses shouldn’t see the change as a time to consider reducing staff numbers or increase product costs.

“While wage increases are a challenge for any business to implement, it does present an opportunity to improve financial health. Being creative with cost savings and identifying new efficiencies can help a business manage when wages increase,” continued Mr Mallett.

“With a vaccine on the horizon in Australia, employers need to remain optimistic and believe things will get better when vaccinations roll out. However, they still need to be proactive and plan for the worst should the worst occur.

“I believe a freeze to the minimum wage in the future will help support the country’s economic recovery. We last saw it happen in 2009 due to unemployment concerns from the global financial crisis, and a global pandemic shouldn’t be any different,” he concluded.


Further enquiries:

Matthew Bridges

[email protected]

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