The Australian Retailers Association (ARA), National Retail Association (NRA) and Australian National Retailers Association (ANRA) have all expressed shock and concern at the Fair Work Commission’s decision to raise the National Minimum Wage by 2.5 per cent or effectively, $16 a week.

From 1st July 2015, the National Minimum Wage will increase to $656.92 per week, or $17.29 per hour. There are 1.86 million workers in Australia on the minimum wage and initially, the ACTU had called for a $27 per week raise.

But in the retail industry, these associations have expressed concern because at the moment retail sales are not high, consumer confidence appears to be low and many retailers are already hampered by high penalty rates.

Retail industry already has high penalty rates

ARA executive director, Russell Zimmerman, said the ARA felt a more realistic increase would have been no more than $5.70 a week, especially because of the retail industry’s high penalty rates.

“Retailers and young Australians have been reliant on pay rates to enable retail to bring on low-skilled young staff and increase their skill levels, reducing youth unemployment,” Zimmerman said.

“Many small to medium enterprise retailers are reliant on a minimum wage workforce, and the announcement today to increase wages during this time of low consumer confidence and low growth will sadly result in further job losses and business closures – a very distressing truth for retailers,” he added.

“The minimum wage increase, coupled with weak trade figures and penalty rates, will only cause further damage to retailers who are struggling to keep their heads above water as it is.

“The ACTU and SDA aren’t about creating jobs and opportunity but they now appear to be on a low productivity/high wages rampage which will only harm retailers and their employees,” he concluded.

NRA feels this rise does not reflect reality     

The NRA said today’s 2.5 per cent increase did not reflect the reality of employment and business conditions for Australian retailers.

NRA CEO, Trevor Evans, said the increase awarded was particularly disappointing in an environment where youth unemployment is growing at an alarming rate.

“At a time when the Australian retail industry is only just returning to average sales growth on the back of a long period of incredibly challenging times, today’s increase will only hinder businesses,” he said.

“Australian business owners are already dealing with some of the highest wages in the world, in addition to irregular shop leasing agreements, which vary from state to state, causing confusion and adding unnecessary costs and regulatory burden to retailers.

“This decision is even more concerning given that the Commission acknowledged concerns about suppressed economic growth and rising unemployment.

“Many businesses will be held back from increasing staff numbers or hours, amid the often unavoidable trade-off between jobs and wage increases that aren’t strongly linked to productivity or efficiency gains.

“It comes at a time when retail employers are facing unprecedented competition from online, overseas-based retailers,” he said.

Retail sector will be hard hit

ANRA’s CEO, Anna McPhee, said: “The flow on effects of the percentage increase in the minimum wage will be hard felt in the retail sector which has a higher award and is characterised by penalty rates.”

ANRA had made a submission of an increase of $9.00 per week to the Fair Work Commission, based on the soft trading conditions and low retail pricing.

“Disappointingly, today’s minimum wage decision by the Fair Work Commission is higher what business feel they can absorb,” McPhee said.

“Today’s decision will affect approximately 370,000 retail workers or 30 per cent of the retail workforce, currently on the General Industry Retail Award 2010…. As an employer of more than 1.25 million Australians and top ten contributor to Australia’s Gross Domestic Product, today’s Fair Work Commission decision can have a sizeable negative impact on the retail sector’s capacity to grow, invest and create jobs,” McPhee added.