• Many employees are happy with the minimum wage rate, but small businesses are voicing their concerns. (Getty Images)Source: Getty Images
The Fair Work Commission has raised Australia's minimum wage by 3.5 per cent - however many small businesses are raising the alarm.
SBS Small Business Secrets
1 Jun 2018 - 2:50 PM  UPDATED 1 Jun 2018 - 5:00 PM

The Australian business community says it will be hit hard as a result of the Fair Work Commission’s decision to raise the minimum wage.

The move lifts the minimum wage to $18.93 an hour, or $719.20 a week from July 1.

Australian Chamber of Commerce and Industry CEO James Pearson says that’ll place additional pressure on small business owners.

“Businesses which can’t pass on such significant rises to customers will have to cut hours, cut jobs or both.”

“The simple reality is that the more expensive it is to employ, the less viable a business becomes. The less viable a business becomes, the less likely they are to employ.”

Australian Retailers Association executive director Russell Zimmerman says any raise above 1.9 per cent, which reflects inflation, will hurt retailers.

“Unfortunately I suspect this will mean retailers will have to look at the number of hours or even the number of employees they are employing, as the costs will not be sustainable.”

Business owners react

That’s the predicament Chris Tourgelis, who runs the OPUS Design gift shop in Sydney, says he now finds himself in.

“We’re going to have to assess it, but I can assure you it’ll make an impact - there will be an impact on rostering for most businesses. It’s not like a business can afford to accept that. There will need to be a saving somewhere to make up for this.”

And he says putting up prices isn’t a feasible solution.

“Twenty years ago, you could have raised prices but now it’s very competitive out there, there’s online competition – you can’t really increase prices and get away with that. As a retailer you’re stuck, most people are price cutting.”

“We recognise there’s a need for wage rises at certain times – but this is a particularly hard time for retailers.”

Restaurateur David Bitton is also feeling pressure, but he says cutting staff isn’t an option.

“We’re going to have to wear the cost because we need the staff,” he told SBS.

He says while he’s happy for employees, the government isn’t doing enough to support small businesses. The minimum wage rise means his profit margins will feel the squeeze further.  “It’s getting smaller and smaller.”

Jenny Lambert from the Chamber of Commerce and Industry says Australia now has some of the highest minimum wages in the world.

“The business community’s always concerned about international competitiveness – this is one race we did want to win.”

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