Minimum wage rise an economic risk: ACCI

By: Mitch Gaynor

The Australian Fair Pay Commission has announced an increase in minimum wages by $21.66, a move considered by businesses as

The Australian Fair Pay Commission has announced an increase in minimum wages by $21.66, a move considered by businesses as economically risky.

This minimum wage increase is likely to flow on into price increases, says Australian Chamber of Commerce and Industry Chief Executive Peter Anderson.

He says it will be mainly smaller businesses forced to increase wages.

"The AFPC has underplayed the impact of recent economic developments, including interest rate increases and fuel price volatility, on the businesses which must apply this wage increase," he says.

"The AFPC has also overstated the extent to which economic conditions support such an increase.

"The businesses primarily paying this increase are not large employers, but are generally smaller businesses in areas such as retail, hospitality and tourism.

In a statement, the Fair Pay Commission stated it did not believe its decision would add to inflationary pressures.

"While the Commission has placed emphasis on the role that minimum wages play in maintaining a safety net for low-paid people, it has not ignored the potential for the increase awarded to add to inflationary pressures," it states.

"However, the Commission believes the inflationary impact of its Decision will be relatively minor.

"The Commission also believes the impact on employment and unemployment will be relatively minor in the context of current economic circumstances."


Commerce Queensland says contrary to the Commission's claims the State's businesses will suffer, with today's decision set to increase the minimum cost of creating a new job to over $32,000 per annum.

In March, the state business representative conducted a survey of between 500 and 600 members, seeking the effect a wage rise would have on Queensland businesses, the results of which were conveyed to the AFPC.

Businesses relayed any decision to grant an increase in excess of $15 would cause significant decreases in employment, investment and training expenditure levels, along with an erosion of profitability.

CQ President Beatrice Booth says these concerns were flagged with the AFPC in April, however went largely unnoticed.

"Combined with recent economic developments, including interest rate rises and fuel price volatility, the wage rise places an additional stress on those businesses already struggling to keep their heads above water," she says.

The decision takes effect from October 1.

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