‘Breathtaking hypocrisy’: The hospitality and retail sectors are urging Australia to not raise the minimum wage as the economy recovers

Hospitality and retail workers may not get another pay rise as Australia mulls leaving the minimum wage on hold. (Asanka Ratnayake, Getty Images)

• The debate over Australia’s minimum wage has reignited, as industry and workers part ways on how to rebuild after the pandemic.
• In submissions to Fair Trading’s annual review, the hospitality and retail sectors have both warned against making any raise for 6 to 12 months until the economic outlook becomes clearer.
• The unions meanwhile claim the federal government has given its tacit approval to freezing minimum wages, blasting it as “hypocritical” after it cut JobKeeper.
• Visit Business Insider Australia’s homepage for more stories.

The minimum wage in Australia may be left where it is as 2.3 million small businesses look to rebuild after the pandemic.

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In the lead-up to the Fair Work Commission’s (FWC) annual review of the minimum wage, the hospitality and retail sectors among others have urged the government to reconsider raising it.

In a newly published submission, industry body Restaurant and Catering Australia urged the government that any increase “should not occur” until at least February next year.

“Business confidence had dropped significantly in the previous year as a result of the COVID-19 pandemic, with industry outlook at an all time low over the next 12 months,” CEO Wes Lambert wrote in a submission on behalf of 47,000 hospitality businesses.

Lambert claimed high wage bills are already weighing down businesses and pointed to a recent review of the industry with a majority of members claiming that it is “impossible to make a profit using online food delivery platforms“.

The hospitality industry is hardly alone in its lobbying effort. The National Retail Association (NRA) echoed those calls at a time of economic uncertainty, requesting any increases be deferred until November.

“A significant increase to minimum wages less than six months after the previous increase, in circumstances where trade remains unpredictable at best and absent at worst, and in the absence of government assistance to meet employment costs, would have a significant adverse impact on both employment outcomes and business survivability,” Deputy CEO Lindsay Carroll wrote.

Last year, the FWC decided to raise the minimum wage by the equivalent of $13 a week as Australia entered a recession.

These concerns are not lost on the government which made its own 102-page submission to the review. It acknowledges the removal of JobKeeper payments last month, coupled with the expiry of temporary measures protecting businesses against insolvency, has removed much of the support that businesses has relied on over the last 12 months.

So too does the outlook remains clouded around the future recovery, and many of its would-be pillars, from the rollout of vaccines to the reopening of state and national borders.

“Given the current uncertainties in the domestic and international economic outlook, the Government therefore urges the Panel to take a cautious approach, taking into account the importance of creating jobs for Australians and ensuring the viability of the businesses, particularly small businesses,” the government submission states.

“Higher labour costs during this challenging period could present a major constraint to small business recovery and may dampen employment in the sector.”

While the government doesn’t explicitly state a position one way or another, the Australian Council of Trade Unions (ACTU) claimed it’s clear the government has “given the green light” to freeze the minimum wage.

“The hypocrisy of the Federal Government is breathtaking – they say its fine to get rid of JobKeeper because the economy is recovering, but workers shouldn’t have a pay rise because the economy is faltering. They can’t have it both ways,” ACTU assistant secretary Scott Connolly said.

The unions and the government are split over what impact raising the wage would have on the economy. The government for one argues that “low-paid jobs are an important pathway into the workforce”, suggesting that jobs growth should be prioritised over wage growth. It also goes on to claim that any increase “may risk adding to underemployment or reducing hours and jobs to the lower paid, which would disproportionately negatively impact women, and perversely serve to reduce incomes and opportunities.”

The ACTU on the other hand argues that lifting wages is the key to Australia’s economic recovery, as higher wages translates to higher spending, demand and employment. It is calling for a 3.5% increase from July 1.

“If wages don’t increase it threatens the entire recovery. Money in the hands of working people is what will create sustainable economic growth, not bigger profits for big business,” Connolly said.

“If minimum wage workers do not have money to spend, local businesses feel it the most.”