COSBOA warns 'higher wages without higher productivity is a disaster waiting to happen' after FWC approves pay bump

Sky News AU

3 days ago

Australia's peak body for small businesses has warned 'higher wages without higher productivity is a disaster waiting to happen' after the Fair Work Commission approved a 3.5 per cent wage increase.
The commission's expert panel revealed that the national minimum wage will increase by $0.84 per hour, to $24.94 per hour, from July 1.
This will lift the weekly full-time wage to $947.95, or $49,294 annually—an overall increase of $1,666 per year for full-time workers.
The Council of Small Business Organisations Australia (COSBOA) CEO Luke Achterstraat said the recent wage bump comes at odds with the nation's lagging productivity.
'We have repeatedly warned that higher wages without higher productivity is a disaster waiting to happen,' Mr Achterstraat said in a statement.
'To ensure that our children don't endure a lower standard of living than us, we need to boost productivity – our workplace settings have a direct impact on this outcome.
'We need to see less complexity, more certainty and a user-friendly approach that encourages small businesses to hire, grow and reward staff.'
Australia's productivity, which is based on 20-year average annual growth rates, was 0.9 per cent in the 2023 financial year.
The rate was between 1.7 and 1.8 per cent for much of the 2000s and 2010s and the slump indicates a downturn in the nation's GDP compared to the number of hours Australians worked.
The Australian Chamber of Commerce and Industries CEO Andrew McKellar said low levels of profitability, poor productivity and stagnant business investment mean employers would struggle with this wage bump.
"For those smallest businesses in the economy, particularly those in areas like retail, hospitality, restaurants and cafes, this will be a very difficult increase for them to take on," Mr McKellar told reporters on Tuesday.
Employer groups had argued for a more modest increase of 2.6 per cent, in line with the current inflation rate.
The Australian Council of Trade Unions (ACTU) had called for a 4.5 per cent increase to lift the minimum wage to $25.18 per hour.
ACTU secretary Sally McManus supported the 3.5 per cent bump and stressed a wage increase was beneficial to small businesses in the long run.
'The very worst thing for small businesses is if workers' wages are going backwards. It means they have to cut back,' Ms McManus told reporters on Tuesday.
'The very first place they cut back on is things that they can afford to. So, that's the little bit extra. It might be the coffee, it might be the sandwich, it might be a beer at the pub.
'You can't cut out your rent. You can't cut out your bills. So it's in the interest, actually, of small business that their customers have more money in their pocket.'
The Australian Services Union, which also pushed for a 4.5 per cent increase, said the hike was particularly critical after soaring post-pandemic inflation ate into real wages.
'Essential workers shouldn't be forced to choose between rent, food and staying warm,' ASU national secretary Emeline Gaske said.
'The 3.5 per cent increase is welcome, but it's only a start. After years of cost of living increases, workers need and deserve long-term wage growth to get ahead.'
The Albanese government, which did not nominate a specific figure in its submission, urged the commission to deliver a real wage rise above inflation.
Employment and Workplace Relations Minister Amanda Rishworth said that the decision was a "win" for workers.
'I welcome the Fair Work Commission's decision to increase the National Minimum Wage and award wages,' she said on Tuesday after the announcement.
'Our government believes that workers should get ahead with an economically sustainable real wage increase.
'A real wage increase provides further relief to our lowest paid workers who continue to face cost-of-living pressures.'