The Australian Retailers Association (ARA) said today’s decision of the Fair Work Commission to increase the minimum wage could tip some businesses over the edge as costs continue to rise.

The ARA’s submission was for the minimum wage to increase by 3.2%, which took in account the intense cost pressures businesses are under, while ensuring the wages of frontline workers could keep pace with the rising cost of living.

ARA CEO Paul Zahra said the Fair Work Commission’s increase to the minimum wage is the highest since 2006, and it comes during an incredibly challenging economic environment for Australia’s retailers.

“The cost of business is a pressing concern and comes as retailers deal with intense challenges,” Mr Zahra said.

“Acute supply chain issues, staff shortages and the rising cost of energy, fuel and materials is creating unprecedented financial pressure. Whilst the ARA supported a fair and balanced increase to the minimum wage, we fear the scale of this increase could tip some businesses over the edge.

“The Superannuation Rate Guarantee is also increasing from 1 July, which is another cost that businesses have to factor in, on top of the inflationary pressures they’re currently experiencing.

“Our economic recovery is uncertain, and with interest rates on the rise and families set to tighten their household budgets, consumer spending is likely to slow in the months ahead posing more challenges for discretionary retailers.

“Whilst the ARA supports an increase to the minimum wage for our frontline teams, the scale of this increase from the Fair Work Commission could send some businesses to the brink.”