Minimum wage rise carries risks: Ridout

07-06-2011

Fair Work Australia’s decision to increase minimum wages by 3.4 per cent will be  “punishing” for many industry sectors, according to the Australian Industry Group.

AiGroup chief executive Heather Ridout says the wage rise will hit big employing sectors already “under siege” from the high dollar, rising energy prices and facing the prospect of further interest rate rises.

"The cost to employers will be much higher after on-costs such as superannuation, workers' compensation and payroll tax are added, says Ms Ridout.

“The decision translates to an increase of $19.40 per week for the National Minimum Wage, $22.60 at the base trade level and $37.70 at the professional level, she says.

"We understand the pressures on the cost of living for the low paid, but this decision is on the high side and it exposes lower-skilled people to a greater risk of unemployment or underemployment.  Therefore, it does carry risks.

"While not wanting to overstate the risks, it has to be said that in the current circumstances faced by non-mining, trade-exposed sectors such as manufacturing and tourism, the decision is sure to further erode margins and will weigh against decisions over retentions and new hiring.”

Ms Ridout says following the Full Bench decision unions should abandon their claim to restore wage relativities to those which existed in 1989.

Such a claim would be very unfair on employers, Ms Ridout said.

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