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The decision to give a pay rise is illogical and dangerous.



COSBOA notes the announcement today that the minimum wage will go up by 1.75%. This is a decision based on ideology and not the current reality that we find ourselves in.


Because, in reality, raising the minimum wage right now will create more unemployment. It will mean that employers with low margins (and that is a lot of them at the moment) will take out their calculators, press a few buttons, then realise they can no longer afford to pay all of their staff and face the decision of who to let go.


We know the response of the unions will be "if you can't afford the new minimum wage, then you shouldn't be in business." Really. So, in other words, if you could afford to pay all of your staff last year's standard but you can't afford to pay all of them this year's standard, you should pay them nothing at all and force them be unemployed.


And I don't think I've mentioned yet that we're in one of the worst economic crises we've seen in a hundred years.


This is dangerous, all-or-nothing thinking. It would seem that the unions are intent on creating a greater gap between the haves (those with a job) and the have-nots (the unemployed).


Peter Strong, CEO of COSBOA, stated "what is under threat is the great position that Australia is in; we already have the second highest minimum wage in the world and we're in the top ten in the OECD for highest average wage. This decision means more people will be unemployed than might be, and that was always going to be a high figure."


COSBOA knows that there are businesses who are unsure and very uncertain about the future. Now they are more uncertain. Businesses in sectors with low margins and high costs such as service stations and those involved with groceries will now be less viable than before the pay rise.

The unions and others argue that a pay rise of $40 is good for the economy. So why do they not ask for a $100 rise? Basically, the argument that it is good for the economy is a fabrication as there is no research that proves that fact - none. If the unions do have that research, then they must know at what point a pay rise is bad for the economy.


Mr Strong added "the decision means fewer jobs just when having a job has become more uncertain. The unions have achieved the creation of a greater gap between themselves and others."


"Let's focus on keeping people employed, not creating greater divisions in society."

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