Labor’s plan to boost salaries could injure small business, says ASBFEO

Labor’s proposal to move from a minimum wage to a living wage could negatively impact many small businesses that are already operating on very low margins and put at risk their ability to employ or even survive,  Australian Small Business and Family Enterprise Ombudsman Kate Carnell said.

"Small business is the biggest employer of labour in Australia and therefore changes to the Fair Work Commission annual wage review processes need to be very carefully thought through to avoid unintended consequences," Ms Carnell said.

"ATO data from 2017 shows that more than 54 per cent of small business owners had taxable incomes below the minimum wage – they are paying their staff and their bills, with little left over to pay themselves," the Ombudsman noted. 

Opposition Leader Bill Shorten has promised that Labor will raise a benchmark that sets wages for millions of Australians in a bid to reduce poverty. 

Ms Carnell, however, argues that if Labor gets its way, over 850,000 businesses would have to either absorb or pass on the increased costs of employing staff to their customers. 

"There are 2.2 million small businesses in Australia – 40 per cent of which employ staff.

"Hardest hit by this proposal would be smaller retailers, those in the hospitality industry, cafes and fast food outlets," Ms Carnell said. 

She noted that the minimum wage increased by 3.5 per cent last year and 3.3 per cent the year before – significantly ahead of CPI. 

"We welcome the opportunity for further consultation and submissions with appropriate focus on the capacity of small businesses to pay and the potential impact on employment," Ms Carnell concluded.