MINIMUM WAGE INCREASE ADDS TO RISING COSTS

AN increase to the minimum wage will add about $4000 annually to the cost of employing a Queenslander, says CCIQ’s Nick Behrens (pictured).

The minimum wage will increase 2.6 per cent from July 1 to $622.20 per week ($16.37 per hour), a $15.80 pay rise, the Fair Work Commission (FWC) decided today.

Behrens, general manager advocacy the Chamber of Commerce and Industry Queensland, expects the decision to have an impact on jobs.

“Our view is, in a generally difficult trading environment, the decision will have some impact on jobs and some businesses may mitigate by adjusting the size of their workforces,” he says.

“That is not desirable, but it is a reality in the difficult economic environment many businesses are experiencing.”

It is a smaller increase than the $17.60 awarded last year, or in the two years prior ($19.40 in 2011 and $26 in 2010), but Behrens says it is still difficult for Queensland businesses to absorb when it is compounded by penalty rates and power prices.

“When you couple the wage increase together with the electricity price rises, with the dramatic increase in insurance – all costs of business are rising, but sales are flat and profitability is being eroded.

“Superannuation, workers compensation, penalty rates, they all hinge off the hourly base rate, compounding it dramatically.”

Employment law expert with McKays Solicitors, Scott McSwan says there will be casualties from the pay boost.

“There is always a cost. The only question is who will pay it,” he says.

“There will inevitably be an impact on small business on the Gold Coast. A small business which can’t afford cost increases may just shut up shop.

“Low paid workers will welcome the $15 a week increase but it could be a double edged sword for them. Sadly, some (employers) may look to reducing staff or in particular reducing the hours of casuals.

In making its decision, the FWC took into account relatively strong economic conditions over the past year, especially compared to other members of the Organisation for Economic Co-operation and Development (OECD) countries.

GDP grew by 3.1 per cent in the year to December and the labour market was “soft, but sound” with a slight rise in unemployment rate.
Inflation has been subdued, at about 2.5 per cent on all Consumer Price Index (CPI) measures in the year to March.

“On all measures, labour productivity increased over the year to the December quarter 2012,” says FWC’s published decision.

“Labour productivity, as measured by GDP per hour worked in trend terms, was 2.9 per cent higher; gross value added in the market sector per hour worked increased by 2.4 per cent; and GDP per capita increased by 1.2 per cent.”