Freeze minimum wage or we’ll shut down, say restaurateurs
Stretched hotels and restaurants will close down or cut their opening hours if the minimum wage is significantly raised, the industry’s peak bodies warn.
Restaurant and Catering Australia and the Australian Hotels Association have called on the Fair Work Commission to freeze the minimum wage at $16.37 an hour or $622.20 per week. Young people and apprentices are paid less on a sliding scale based on their age and progress towards a qualification.
Restaurant and Catering Australia chief executive John Hart said a survey of 400 of the peak body’s members showed that 40 per cent could not withstand a 5 per cent increase in the minimum wage and would close.
Mr Hart said that level of wage increase was not unexpected given penalty rates would magnify the standard recent increase of 3 per cent to 4 per cent up to an effective increase of 5 per cent. The industry already experienced about 20 per cent annual turnover of businesses so it was not unreasonable to suggest that figure could double in the wake of a spike in wages, he said.
“If you are losing money every day, and a cost of business that is 50 per cent of every dollar coming in the door increases by 5 per cent we have got to be questioning why you would want to keep operating that business, it is just not worth it,” he said. “I would love you to ring me in three years saying it didn’t happen. I would hate to say unfortunately it did and we told you so.”
The survey also found that a 2 per cent minimum wage increase would prompt almost half (46.9 per cent) to reduce their staff hours while a further 10.8 per cent would reduce their opening hours. The association estimates that a combination of minimum wage increases, the new modern awards and increases in superannuation have already pushed up basic wage costs by 23 per cent since 2010.
Mr Hart said cutting staff or opening hours was often a precursor to closure.
COMMISSION BIASED AGAINST INDUSTRY ARGUMENTS
He said there was also an argument to carve out struggling industries, such as restaurants, from a wider increase in the minimum wage as was done during the height of last decade’s drought.
But he complained that the commission panel hearing the case was biased against the industry arguments. “It will be the same as it always is. The commission over the recent years has basically concluded that our arguments about business bankruptcies and the like are totally unfounded,” he said.
Mr Hart, who sits on Prime Minister Tony Abbott’s business advisory council, said the federal government’s planned new appeals body for commission judgments should be able to review minimum wage decisions and do so retrospectively.
The hotels industry will also lobby for a freeze on the minimum wage.
“The business environment is not in a position to support it,” AHA national chief executive Stephen Ferguson said .
Mr Ferguson said it was “terribly hard” to pass increased wage costs on to customers. He also acknowledged that the industry had unsuccessfully pleaded for a wage freeze previously.
“Every year we repeat the same thing and each year no-one listens, it just gets harder,” he said.
A higher minimum wage would discourage the hiring of staff, he said.
Unions and industry groups are required to lodge their submissions by Friday. It is expected that other employer groups will also argue for moderate or zero increases. The ACTU has already signalled it will be pushing for a pay rise for the nation’s lowest paid workers arguing, in part, that housing affordability should be considered. Research commissioned by the commission to inform this year’s decision found that minimum wage increases accelerate wages growth across the economy. The wage prices index posted a lowest figure in its 16-year history of 2.6 per cent for the year to the end of 2013.
While bargaining outcomes have also slid slightly with new statistics released last week showing agreements struck in the December quarter of last year locked in average annual pay increases of about 3.5 per cent.
Source: Financial Review - 27 March 14
