An idea reportedly floated by the federal opposition to move from a minimum wage to a living wage has “sent a shiver down the spine of small businesses throughout Australia”, an industry body has claimed.
Nine Media quoted opposition leader Bill Shorten (pictured) as declaring the upcoming election to be “a referendum on wages”, and that the current minimum wage “is nowhere near a living wage”.
“It will be a contest about who the economy will work for, about whose interests it should serve… our wages system, our remuneration system, needs to be renovated,” he told a business summit in Sydney.
However, James Pearson, head of the Australian Chamber of Commerce and Industry (ACCI), slammed the idea, suggesting that it could “cost our economy more than $8.7 billion per year”.
“[This] will dismay the hundreds of thousands of small and family businesses who depend on the current independent minimum and award wage setting process to set the wages they pay,” he said.
“Labor’s position seems entirely focused on pushing up wages, without any regard for the capacity of businesses, particularly small businesses, to afford to pay, and without regard to the impact on jobs and hours. It will send a shiver down the spines of small business people throughout Australia.”
Mr Pearson said that, particularly, small businesses are “already struggling to keep people in work”, and that such a move would dramatically increase the cost of labour even more.
“If Australia moves to massively increase minimum wages, jobs will be lost, hours cut and businesses will go out of business — the basic economics of employing and staying in business will change for small businesses across the country,” he said.
“There is nothing surer.
“Labor needs to clarify, urgently, exactly what it intends, how it would change the rules for minimum wage setting and how much it wants to increase minimum wages.”
According to Mr Pearson, Australia already has the second-highest minimum wage in the world, behind Luxembourg, but that the minimum wage only applies to 200,000 working Australians, or just 1.9 per cent of the workforce.
He added that “our minimum wages are set by a panel of people Mr Shorten appointed as minister under rules Labor put in place [while] in government”.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.