Wage hike to reduce hours worked: CCI

An increase to the minimum wage announced today will mean Western Australian businesses pay roughly $20 per week more for mimimum wage workers than their eastern states counterparts, while the Chamber of Commerce and Industry of WA warns it will have a flow-on effect on employment.

A rise of 1.9 per cent, or $13 per week, to $692.90 was announced by the Western Australian Industrial Relations Commission today, and can be compared to the Fair Work Commission recently lifting the national rate 2.4 per cent to $672.70.

The $13 increase will flow through across the entire state award system and commences on July 1.

It means the gap between the two rates has fallen, although not as much as sought by CCI and the Department of Commerce in their submissions.

UnionsWA had sought a 4.4 per cent increase, which would have widened the gap between the state and federal rates.

Year on year inflation in WA was 1.3 per cent to the March quarter, with 1.75 per cent anticipated in the coming financial year.

Fewer hours

CCIWA chief executive Deidre Willmott said part-time and casual workers would be worst affected, likely working fewer hours.

“Most small business owners will not be able to pass this increase in costs onto consumers, so owners will likely work more hours in the business themselves – taking shifts away from part-time and casual workers and inhibiting job creation,” she said.

“While today’s decision will reduce the gap between the state and national minimum wages somewhat, WA’s small sole traders and partnerships in WA will still be paying $20 per week more than businesses covered by the national industrial relations system.

“Particularly while WA is working to broaden our economy, it is disappointing that our small business owners will continue to be penalised with higher labour costs than other states.”

The CCI had advocated for a freeze of the rate, as that would over time ensure parity with the national rate as the latter was lifted.

Ms Willmott said it highlighted that power over the state’s wage regime needed to be transferred to the federal Fair Work Commission.

“The fact that the smallest employers in WA are still expected to pay $20 per week more than employers in the national system once more raises the question, why are we retaining a separate system?” she said.

WA unemployment was 5.6 per cent in seasonally adjusted terms in April, according to the Australian Bureau of Statistics, below the national average of 5.7 per cent.

UnionsWA secretary Meredith Hammat said the rise was not enough.

“The minimum wage is particularly important in WA with our high costs of living,” she said.

“UnionsWA had called for the Commission to increase the WA minimum wage and reliant awards by 4.4% equivalent to $30 pw for a full time adult worker.

“As recently as 2006 the Minimum wage was 50 per cent of average wages, now it is at 40 per cent.”

Youth hit

HR Nicholls Society executive director John Slater said the minimum wage increase would be bad news for those who were unemployed.

“In particular, it will be especially damaging and harmful to the more than 12 per cent youth unemployment rate,” he said.

“Young workers in particular, lack the skills and experience to command higher wages in the labour force.

“Getting into the labour market, getting skills and experience, is the best way for them to secure long term gainful employment.”

He said the rise would lift the barriers to entry for young people seeking to enter the market.

A minimum wage was effectively a legal limitation on the ability of lower skilled workers to compete, Mr Slater said.

He pointed to research undertaken by federal Labor Party shadow assistant treasurer Andrew Leigh, which he said showed that every 1 per cent increase in the minimum wage would negatively affect employment by 0.29 per cent.

“The skills that people gain through simply being in an employment situation set them up for a productive long-term adult life," Mr Slater said.

“Although a (5.6 per cent) unemployment rate in post GFC times may seem low or not cause for concern, I think that’s easy to say for people who are in steady careers.”