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Small businesses under pressure: COSBOA responds to 3.75% industry award rate hike

Today’s decision by the Fair Work Commission to legislate a 3.75 per cent increase to over 100 industry award rates means more pressure for small businesses already weathering a perfect storm.


COSBOA CEO Luke Achterstraat said that small businesses seek to provide rewarding and well remunerated jobs but rising costs and sinking productivity puts 2.5 million small businesses further at risk.


“The levy has broken for many small businesses with rising energy, rent, insurance and borrowing costs. This increase of 3.75 per cent to wage costs when annual productivity is at 1.2 per cent does not add up or bode well for jobs.


“The figure comes on top of the 5.75 per cent legislated last year – which was the highest in a decade – plus an impending increase in the superannuation guarantee, and an increase in the Temporary Skilled Migration Income Threshold (TSMIT) of almost 40 per cent from just over 12 months ago.”


Mr Achterstraat said employment costs also included superannuation, workers compensation and payroll tax.


“A $50 increase in wages means a $59 increase in total costs for small businesses. Owners will be forced to pass on these costs which means higher prices and inflation.


“And where they are unable to do so, they face the insidious decision of reassessing staff levels and possible job losses.”


Mr Achterstraat said it was easy for politicians to welcome rising costs when someone else is paying for it.


“Particularly in labour-intensive industries like hospitality, retail and services, labour costs can represent almost half of the overall operating costs.”


“Small business owners are struggling with 43 per cent currently not breaking even. Owners are paying themselves less than the average salary and working longer than the median to keep the lights on.”


Mr Achterstraat said the operating environment for small business is tougher than ever.


“ASIC’s Insolvency Statistics published last week show the horrid figure of business insolvencies in NSW now up 61 per cent from this time last year.


“We urgently need better policies that promote productivity and innovation to ensure strong wage growth is sustainable. Failure to do so will only push more small businesses to the wall,” said Mr Achterstraat.

For more information about COSBOA, visit: 

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Luke Achterstraat

Chief Executive Officer

Council of Small Business Organisations Australia



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