More than 2.6 million Australians will receive a pay rise, the Fair Work Commission announced yesterday: minimum wages will increase by 5.2 per cent ($40 a week) and award wages by 4.6 per cent.
“The Albanese Government’s submission to the Fair Work Commission asked them to ensure that low-wage workers didn’t suffer a real wage cut,” Dr Andrew Leigh, MP for Fenner, said. “Today’s [15 June] decision delivers that outcome.”
The ACT Council of Social Service believes the wage rise will benefit low-income workers.
“This approach recognises the challenges that low-income workers are facing with high inflation and rapidly rising cost of living,” said ACTCOSS CEO, Dr Emma Campbell.
But the Canberra Business Chamber (CBC) fears it will put more pressure on businesses (particularly small, family-owned ones), causing costs to increase.
“For most of [Canberra’s] those small businesses, this morning’s announcement will add even more pressure along with rapidly rising inflation, supply chain bottlenecks, and acute labour and skills shortages,” said Graham Catt, CEO of the CBC.
Canberra Business Chamber
Canberra’s business community is made up mostly of small, family-owned businesses, Mr Catt stated: only 40 of the 31,000 active businesses here 40 employ more than 200 people.
“As the whole community faces cost of living issues, local Canberra businesses are struggling to manage rapidly rising costs,” he said.
According to recently released data from the ABS, around 60 per cent of businesses have had their costs surge in 2022.
“While some businesses have rebounded strongly in 2022, the reality is that many sectors continue to struggle. Many award-reliant business were severely disrupted by the COVID-19 pandemic and are only just recovering.
“Today’s decision will make that harder.
“Businesses have done what they can to avoid passing price increases on to consumers. But with already thin margins, the wage increase will leave many with no choice but to pass on costs.
“The biggest issue facing local businesses right now is shortages of local workers. Businesses can’t find staff, and they’re struggling to keep them. Many businesses have given people pay increases far in excess of 10 per cent to try and retain them.
“So, today’s announcement adds costs for those who are struggling and reliant on paying minimum wage, yet does nothing to address the biggest problem for employers, which is that they simply haven’t got the workers and can’t find the workers.”
Dr Campbell, however, believes the wage rise will bring more money to local businesses.
“Unlike people on high incomes who save additional money, we know that when we put money in the hands of people on the lowest incomes, they spend it immediately in the local economy.
“People on the lowest incomes are covering basic costs like utilities, rent, and food, but also buying new clothes for the kids, replacing broken appliances or white goods, or getting the car fixed.”
ACTCOSS
In Dr Campbell’s opinion, the wage rise will protect community workers and other low-income earners from the rising cost of living.
Employees in the ACT community services sector are some of the lowest paid workers in the Territory, Dr Campbell said. Nearly 80 per cent of the workforce are women, and people from migrant and refugee backgrounds, people with disability, and Aboriginal and/or Torres Strait Islander peoples are overrepresented.
“Community sector workers have been on the frontline of the COVID-19 response, and they deserve salaries that reflect their contribution to the community and that enable them to live in Canberra with dignity and security,” she said.
High rents in the ACT pushed essential community sector workers into serious financial stress, according to the Everybody’s Home campaign, Dr Campbell noted.
Essential community sector workers need to use between one-third and two-thirds of a normal week’s wages to rent an apartment in most Canberra suburbs. To rent in the inner North or South, an essential community sector worker needs to sacrifice more than two-thirds of a full working week’s income.
Increases in minimum and award wages were an important step towards reducing the pay gap between men and women, Dr Campbell argued.
“The ACT is facing rapidly increasing costs. The rising cost of living impacts the ACT’s community sector in a variety of ways. Rising costs compound the challenges faced by tens of thousands of Canberrans who are already struggling to pay for the basics. Individuals and families are unable to afford the cost of rent, utilities, food, transport, education, and healthcare,” she said.
“We are already seeing growing deprivation among clients and increased demand for our services. Price rises in areas including utilities, transportation fuel, food and provisions, and insurances also mean that it is costing more to deliver the same community services.
“Federal and ACT government funding for the community services must be increased in line with wage increases and rising costs of delivering services to enable the sector to meet growing demand.”
Levels of funding and indexation will be the decision of the Government and Cabinet.
Rachel Stephen-Smith, ACT Minister for Families and Community Services, reached out yesterday to the ACT community service sector to acknowledge that the wage rise was critical for its workforce, but they would need to cover those costs, and to reassure the sector that the ACT Government and Cabinet would consider increasing funding.
“We welcome this engagement, and look forward to collaborating with the ACT Government to ensure our organisations, staff, and the people we work with are properly supported,” Dr Campbell said.
Greens
Andrew Braddock MLA, the Greens industrial relations spokesperson, believes more should be done.
“A rise in the minimum wage in line with the rate of inflation is not a raise. It does not make life more affordable for those on the minimum wage and does nothing for those who are on income supports such as the pension. Structural change is required to bring these groups out of poverty.”
