Federal Labor's Living Wage Proposal is Unrealistic and Hurts Small Business: CCIQ

Tuesday 26 March, 2019 | By: Dan Petrie

The Chamber of Commerce and Industry Queensland (CCIQ) has called on the Federal Opposition to reassess its living wage plan and abide by the Fairwork framework it established when it was last in government.

Australia according to data compiled by the OECD has one of the highest minimum wage rates in the world and the proposal of a living wage is one that is predicated on the ability of small to medium sized enterprises to pay such wages.

CCIQ Head of Media and Industry, Dan Petrie said the standard of debate in Australia has been ‘highjacked’ by emotive rhetoric of ‘haves and have nots’ as opposed to the reality that vast majority of businesses are running on small margins and absorbing significant increases in fixed costs.  

“Queensland businesses with less than 20 employees provide the largest number of the state’s jobs (44%) and medium size businesses employ between 20 and 200 (23%), so together SMEs make up two-thirds of all jobs.

“The economic reality is that, where theory meets practice, it is reckless to legislate the highest wages in an idealistic world when in the real world you will have no employers able to afford to provide these jobs”, Mr Petrie said.

CCIQ notes if a living wage were introduced, it will put state governments under further pressure to raise the payroll tax threshold to prevent significant job losses.

Business confidence in Queensland is disappearing rapidly across the state - business owners are struggling to absorb minimum wage rises in consecutive years that have been far beyond the level of inflation (which reflects the prices of the goods and services provided by businesses) as well as paying their operating costs, which Labor’s energy policy will certainly only serve to put further pressure on business margins.

ABS statistics on business counts in Queensland show that business survival rates over five years to 2018 were a paltry 63%, and it was worse for business entries with a 53% survival rate over that time.

CCIQ points to evidence that has started to emerge in the ABS statistics that average incomes in Queensland have fallen in those sectors that are most affected by rises in the minimum wage, particularly the retail sector, where average hours of work has fallen in line with average hourly incomes (CONUS, 2019 - https://www.conus.com.au/blog/).

RMW2

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