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‘Businesses simply can’t afford it’: Minimum wages increase this week

A 1.75 per cent increase to minimum wages has come into place, as part of the Fair Work Commission’s annual wage review announced in June.

Usually, minimum wage increases take effect from the beginning of the financial year. However the wage increases for a number of industries have been delayed due to the effects of the coronavirus pandemic on businesses.

As of November 1, the national minimum wage has increased by 1.75 per cent to $19.84 per hour, a $0.35 hourly rate rise, for workers in construction, mining, manufacturing, and a range of other industries. In other words, a full-time employee now receives $753.80 per week, an increase of $13.00.

Employers who pay an annualised salary in satisfaction of modern award entitlements will need to ensure that the salary is sufficient to cover the increased pay rates.

The retail, hospitality and vehicle repair industries, and other industries which are considered to have been significantly affected by the coronavirus pandemic, will also be subject to the 1.75 per cent minimum wage increases from 1 February 2021.

Ed Mallett, Managing Director of Employsure, has criticised the compulsory wage increase, saying it has come at an unideal time for small businesses.

“This increase comes at a time when a number of businesses simply can’t afford it,” said Mr Mallett.

“Hundreds of businesses who were on the original JobKeeper wage subsidy scheme are now either no longer eligible, or are on the new reduced payment, scheduled to drop again at the start of next year.

“Many of our clients have told us they haven’t fully recovered from the financial fallout this year as a result of COVID-19, and sadly, some have, or will have to close as a result.”

Mr Mallett says understanding minimum wages in Australia is one of many crucial elements an employer should be aware of when running a business. Employers and employees cannot legally be paid less than their applicable minimum wage, even if they agree to it.

When it comes to an employee’s minimum wage, minimum entitlements under the relevant Award or agreement need to also be factored in. These entitlements are set apart across a variety of factors such as industry, job type and experience in the role.

The wage increase will have an administrative and financial impact on the bottom line, as it does every year. However, Mr Mallett says businesses shouldn’t see the change as a time to consider reducing staff numbers or increase product costs.

“While wage increases are a challenge for any business to implement, it does present an opportunity to improve financial health. Being creative with cost savings and identifying new efficiencies can help a business manage when wages increase.

“I believe a freeze to the minimum wage in the future will help support the country’s economic recovery. We last saw it happen in 2009 due to unemployment concerns from the global financial crisis, and a global pandemic shouldn’t be any different,” concluded Mr Mallett.

The Fair Work Commission will be issuing the updated awards and corresponding pay guides on 31 October 2020.

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Ellie Dudley

Ellie Dudley

Ellie Dudley is a journalist at Dynamic Business with a background in the startup space and current affairs reporting. She has a specific interest in foreign investment and the Australian economy.

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