Small business to foot the bill of higher wage costs

The Council of Small Business Organisations Australia (COSBOA) has today reminded government that Australia’s small businesses will be the ones footing the bill for higher legislated award rates.

COSBOA CEO Luke Achterstraat said small businesses were the largest private sector employer in the country and much more consideration should be given to their operating environment.

“Small businesses are facing a cost crisis across energy, rent, insurance and input costs. Today’s decision of a 3.5% increase — which is above the current rate of inflation — will have ramifications for our small business engine room, many of whom are struggling to make a profit on already razor thin margins.

“For every dollar increase in the award rate, employers also face higher levels of workers compensation, payroll tax and of course another legislated increase in the superannuation guarantee from 1 July.”

There is a limit, said Mr Achterstraat, to how much small businesses could pass on these costs, meaning owners likely bear the brunt.

“This decision will affect more than 100 different industry awards and a multitude of different role classifications. Many owners will need to personally absorb these higher costs, unable to pass on any further price rises to consumers.”

COSBOA maintains the government must recognise who is footing the bill and emphasise the focus should be on sustainable wage growth linked to productivity. 

“Ultimately, someone needs to pay here and overwhelming that will be small business.

“The irony here is that our industrial relations system continues to be a drag on productivity, and that is bad for workers and businesses.”

Mr Achterstraat said the new Minister for Workplace Relations must make productivity the primary focus.

“We have repeatedly warned that higher wages without higher productivity is a disaster waiting to happen.

“To ensure that our children don’t endure a lower standard of living than us, we need to boost productivity – our workplace settings have a direct impact on this outcome.

“We need to see less complexity, more certainty and a user-friendly approach that encourages small businesses to hire, grow and reward staff,” insisted Achterstraat.

For more on giving small businesses a Fair Go, visit: cosboa.org.au 

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For media enquiries or interviews, please contact Luke Achterstraat, Chief Executive Officer, COSBOA on ceo@cosboa.org.au or call +61 (0) 433 644 097.

About COSBOA

Established in 1979, The Council of Small Business Organisations Australia (COSBOA) is a member based not-for-profit organisation exclusively representing the interests of small businesses. The capability, representation, and reach of COSBOA are defined by a mix of over 50 national and state-based members. COSBOA's strength is its capacity to harness its members' views and advance consensus across policy areas common to many.

Our member organisations work with the COSBOA team to assist us with policy development and guide our advocacy - not just for small businesses but also for the benefit of the Australians they employ. In this capacity, COSBOA makes submissions and representations to the government, including its agencies, on issues affecting small businesses and to pursue good policy.

For more information, visit www.cosboa.org.au