Minimum wage rise a blow to some employers but a benefit to others

Published June 16, 2021 -
Min Wage Rise

 The increase to the minimum wage will be a detriment to some employers still struggling through the pandemic, but for others, it could act as the catalyst that will assist with economic recovery.

The Fair Work Commission has decided to increase the national minimum wage by 2.5% to $20.33 per hour, a $0.49 hourly rate rise. In other words, the minimum a full-time employee will receive is $772.60 per week, an increase of $18.80.

The rise in wages will again be staggered over several months for certain industries. While most will see the increase take effect in July, general retail will be delayed until the first full pay period on or after September 1. Workers covered by more than 20 awards, including tourism, hospitality, restaurant, fitness, hair and beauty, and aviation won’t see an increase until after November 1.

“As our economic outlook starts to look brighter, there are two ways you can view this latest increase to the minimum wage,” said Senior Employment Relations Advisor Michael Wilkinson.

“If you look at small businesses in states like Victoria, where four separate lockdowns have occurred, the wage rise will undoubtedly result in further closures and job losses, as employers have not had an opportunity to recover.

“In states like New South Wales however, where hardly any restrictions remain, employers have had the freedom to stay open undisturbed, which has resulted in more customers. A rise in wages means employees will then have more money to funnel back into the economy, which could ultimately lead to more cash back in the pockets of business owners.”

The staggered approach to increasing the minimum wage across certain industries may cause confusion for employers. With international borders still closed for the foreseeable future, and snap lockdowns still clearly well on the cards, employers must use this time to try and preserve as much cash as they can, until the COVID-19 vaccine fully rolls out and overseas travellers can enter.

As we wait for such a time, Australia’s focus should continue to be to support small business owners in their recovery. The federal government’s industrial relations bill earlier in the year had an opportunity to provide a positive change for employers, but as we saw, the stripped-down final version of the bill barely scratched the surface.

Now, in the upcoming meeting of the statutory IR consultative committee on the 25th of June, ministers, employer groups and unions have an opportunity to restart the discussion.

“Australia’s IR system is one of the most complex in the world, and what employers really need is a more simplified version that will bring our country’s system in line with modern standards.

“Small business employers have been forced to make sacrifice after sacrifice over the past year and a half, which has resulted in countless job losses and business closures. This upcoming meeting should reopen the debate for positive change, and work to create meaningful reform that will benefit SMEs for years ahead,” concluded Mr Wilkinson. 

Further enquiries:

Matthew Bridges

[email protected]

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