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Business braces for big pay hike

WA’S small businesses could soon be giving some of their employees a more than 20 per cent pay rise with the minimum wage rate jumping to up to $446 a week.

In less than two weeks, WA’s minimum wage will go from $368 to $400.40 but that will not be the last wage hike.

One of Labor’s election promises was to raise the minimum wage by $50 a week.

Therefore, another $17.60 will be added to minimum wage earners’ pay packets, taking their wage bill to $418 a week.

The Australian Council of Trade Unions wants to lift all award rates by between 5.7 per cent and 7 per cent.

If that claim is successful, that wage increase will flow on to WA.

Labour Relations Minister John Kobelke said he had ordered the first wage rise to bring WA’s Minimum Conditions of Employment wage scale into line with the State Award Minimum.

Mr Kobelke said Labor would be putting up legislation to Parliament in the first sitting to give the Industrial Relations Commission power to pass on the extra $17.60 a week pay rise and any pay rise from the Federal wages claim.

Chamber of Commerce and Industry director operations Brendan McCarthy said the WA Government was aligning the State non-award minimum with award minimums.

“This is a back-door way of bringing non-award workers into the award system,” Mr McCarthy said.

“If Mr Kobelke continues with this line and the ACTU gets its wage claim up, WA’s weekly minimum wage could become $446.”

Combined Small Business Associations of WA president Oliver Moon said the wage rise was going to hit small businesses hard because many of them could only afford to pay minimum wage.

“The big end of town is governed by awards so the minimum wage doesn’t affect them,” Mr Moon said.

“Small businesses are usually not covered by awards. They either pay staff on the minimum wage or have workplace agreements based around the minimum wage.

“This could cause small businesses to put off some employees.

“The worst thing is there was no warning about this change.”

Mr Kobelke promised before the election that Labor would leave wage decisions up to the Industrial Relations Commission.

The Commission suggested raising WA’s minimum wage by 4.5 per cent in January, but Mr Kobelke decided to lift it by 8 per cent.

“We also promised to close the discrepancy between the Award minimum and the Minimum Conditions of Employment Act,” he said.

Mr McCarthy said the wage rise was likely to hurt WA’s economy.

He believes the wage rise, coupled with weak economic conditions, will crimp any employers’ hiring plans.

“Though few employees are actually paid at the State minimum level, any changes do flow on any time into higher wage ranges to maintain pay relativities,” Mr McCarthy said.

Mr Kobelke admits the wage rise is likely to have an impact on the economy and small businesses.

“If it was pretty tough out there, we’d look at how we’d flow the other pay rises in,” he said.

“But it should be remembered that an increase in wages for the lowest paid will mostly need to be spent and will flow back into business, especially small retailers.

“To increase the minimum wage by $32 is a significant amount but that simply shows how far behind it has been compared to employees in the rest of Australia.

“What we have set out to do is redress the imbalance that has been allowed to exist and ensure WA workers are compensated at the same rate as the rest of Australia.”

Mr Kobelke said small business had to be on a level playing field.

“When the Federal wage increase comes through we’d just be playing catch up again,” he said.

“There has been a fair bit of talk by the business sector that the State minimum is too low.”

Not all business groups are against the change.

The Master Cleaners Guild believes Mr Kobelke has taken a step in the right direction.

Guild executive director Ian Westoby said the minimum wage for cleaners should be equal to the Contract Cleaners Award – $439.28 per week.

There are no definitive statistics on how many employees are on the minimum wage. Estimates vary from 5,000 to 20,000 out of a one million-strong workforce.

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