Reasonable minimum wage increase critical to support small business and create WA jobs

The Chamber of Commerce and Industry WA’s (CCI) submission to the 2019 State Wage Case calls for balance to be struck between real wage growth in Western Australia and the capacity for small businesses to absorb the additional costs in WA’s difficult economic climate.

CCI has recommended an increase of no more than 1.4 per cent. Inflation last year was 0.9 per cent. We believe this above inflation increase strikes a realistic balance between real wage increases and employment growth in WA. Sudden large increases in the minimum wage in WA will cost jobs in the economy which is the last thing we need right now.

Businesses are doing it tough in WA, particularly small and medium-sized businesses. WA’s domestic economy remains fragile, slowed down by falling business investment, flat retail trade and the second highest unemployment and youth unemployment rates in the country.

We need to support small business to create as many new jobs as possible, not burden them with sudden and unreasonable increases in the minimum wage. Small businesses do not have a high capacity to absorb increases in operating costs or respond to weakening demand and generally have less capacity to adjust to the adverse economic conditions WA has experienced in recent years.

Most small business owners earn $50,000 a year or less whilst working incredibly long hours and putting their life’s savings at risk. We must consider their ability to afford these pay increases that come out of their own take home pay.

Unions WA’s proposal to increase the minimum wage by 6 per cent and move towards a living wage will stunt WA jobs growth, leaving some with a pay rise but others without a job at all. The unions are determined for WA’s minimum wage to increase to 60 per cent of the median wage, which would require a 19 per cent shock increase and cause job losses across small and medium sized businesses. The last thing WA needs right now is policies put forward by the unions that would mean big wage rises for some but job losses for others.

West Australians understand there is a trade-off between wages and employment. Recent Patterson Research Group state-wide polling of 906 West Australians, commissioned by CCI, revealed that 78 per cent of West Australians believe small businesses would be forced to reduce existing worker’s hours, reduce their number of employees or delay hiring new workers if a 5 per cent wage increase was introduced nationally – about a quarter of Unions WA’s proposed increase to a living wage.

This backs a recent CCI survey of WA businesses which found that 76 per cent of WA businesses expect jobs will be lost, hours cut or hiring delayed.

CCI supports reasonable and sustainable wage growth through a minimum wage that considers productivity, and therefore business capacity, as an essential ingredient for growth and employment in WA.

To read CCI’s submission to the Western Australian Industrial Relations Commission State Wage Case 2019, click here.

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