Small businesses under pressure as wage increase recommendation adds to mounting costs

The Council of Small Business Organisations Australia (COSBOA) has warned that a proposed above-inflation increase to the minimum wage risks adding further pressure to small businesses already operating under significant financial strain.

COSBOA CEO Skye Cappuccio said the Government’s recommendation to the Fair Work Commission comes at a time when small businesses are facing compounding cost pressures, heightened uncertainty, and limited capacity to absorb further increases.

“Small businesses are operating in a pressure cooker environment right now,” Ms Cappuccio said.

“Our latest Small Business Perspectives Report shows that 64 per cent of small businesses reported lower profits over the past year, and 60 per cent were unable to pay themselves at least occasionally.

“At the same time, 72 per cent say rising costs are the biggest barrier to growth, with fuel, wages, insurance and energy all continuing to increase.

Ms Cappuccio said recent fuel price volatility and supply uncertainty have intensified pressures across supply chains, with impacts being felt across sectors and into the broader economy.

“Some businesses can pass on costs, but many cannot – and no small business can absorb sustained increases indefinitely,” she said.

“There is also significant uncertainty about how current conditions will play out in the coming months, making it extremely difficult for small businesses to plan, invest and make decisions about their workforce.”

Ms Cappuccio said that for many small businesses current conditions are approaching crisis point.

“For a growing number of small businesses, this is not theoretical – it is about day-to-day viability,” she said.

“In that context, adding further cost pressures through an above-inflation wage increase risks compounding an already fragile situation.”

COSBOA said that while cost-of-living pressures for workers are real and must be addressed, policy settings must also reflect the capacity constraints facing small businesses.

“Small businesses want to pay their staff fairly and continue to employ and support their communities,” Ms Cappuccio said.

“But measures designed to support households cannot come at the expense of the sustainability of small businesses.”

“We need to ensure that measures designed to support households do not unintentionally put those jobs and businesses at risk.”

Ms Cappuccio said COSBOA’s position is that any changes to minimum wages should be approached with caution in the current environment, with careful consideration of timing and cumulative cost impacts.

“Right now, small businesses need stability and certainty,” she said.

“Delaying significant changes until there is greater clarity on current economic conditions would help ensure decisions do not unintentionally put businesses, jobs and investment at risk.”

“Small businesses employ around five million Australians – their viability matters not just to the economy, but to communities across the country.”

-ENDS-

Notes to Editors:

Media contacts:

• Debbie Bradley, Group Account Director, Zadro | debbie@zadroagency.com.au | +61 420 761 189.

• Marlise Beasley, General Manager & Account Director, Zadro | marlise@zadroagency.com.au | +61 423 624 013

About Skye Cappuccio, CEO, COSBOA

Skye Cappuccio was appointed Chief Executive Officer of the Council of Small Business Organisations Australia (COSBOA) in February 2026. She brings extensive experience in stakeholder engagement and strategic advocacy, having worked across multiple peak professional and industry bodies to deliver practical reform outcomes. Skye is focused on ensuring small business voices are embedded in Australia’s economic and regulatory decision-making.

About COSBOA

Founded in 1977, and incorporated 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.

www.cosboa.org.au