Wage decision will protect Queensland employment levels
The Chamber of Commerce and Industry Queensland (CCIQ) says the decision to increase the National Minimum Wage (NMW) by 2.4 per cent is higher than anticipated.
CCIQ had urged the Fair Work Commission to implement only a modest increase to ensure Queensland small businesses could retain staff and create more employment opportunities.
The Commission came back with an increase in the NMW amounting to an extra $15.80 per week.
CCIQ Director of Advocacy Nick Behrens said that while the increase was higher than many businesses had hoped for, it was the lowest increase in percentage terms since 2009-10.
He said small business could work with the 2.4 per cent increase announced by the Commission today in its 2015-16 Annual Wage Review.
“The wage decision is unquestionably lower than employees have been used to, so they may feel like they are missing out, but the evidence shows this is not the case,” Mr Behrens said.
There are three key facts that put the decision into proper context:
1. Real wages are still growing at the same rate they have in recent years
“Real wages are what really matter because they measure purchasing power by adjusting headline wage growth for changes in the cost of living,” he said.
“Consumer price inflation is at a low, actually contracting in the March quarter (-0.2 per cent), and the fact that businesses are keeping prices low is offsetting lower headline wages.”
2. Slower wage growth means more jobs
“Lower wage decisions give businesses scope to employ more people as the Australian and Queensland economy adjusts to post resource boom times.
“Slower wage growth is the main reason why the unemployment rate has been lower than expected. Even the Reserve Bank acknowledges that employment is higher than it would have been without the current level of wage restraint.”
3. Businesses face challenges
Mr Behrens said ABS data measuring Queensland’s domestic economy had indicated widespread difficulty in the Sunshine State.
“The majority of Queensland businesses have cited a challenging trading environment with relatively flat sales, rising operational costs that are squeezing profitability and in turn ongoing capacity of individuals hours of work offered and wage increases.
“Slow wage growth reflects Australia and Queensland’s broader economic challenges.
“Queensland businesses are under pressure and some of the effects are flowing through to workers.”
Mr Behrens said the Australian labour market had recently seen a sharp rise in youth unemployment and shifts in employment demand.
“Stark economic conditions have been reflected in low wages growth and highlight employers’ inability to sustain or absorb wage increases more broadly,” he said.
“It is with these factors in mind that CCIQ encouraged the Commission panel to resist any significant increases in the NMW, as significant increases directly impact employment outcomes.”
Mr Behrens said in previous years Queensland small businesses had been challenged by big increases in the NMW, with Australia claiming the highest minimum wage in the OECD.
“On the whole, Queensland businesses will live with this decision,” he said.
The national minimum wage will be $672.70 per week or $17.70 per hour.
Source: ABS Catalogue 6401, 6345.0 & MYFER