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CEO opening address to FWC Annual Wage Commission

Paul Zahra, ARA CEO,  appeared before the Expert Panel of the Fair Work Commission (FWC) in relation to its annual wage review consultation on 17 May, 2023.  

The ARA has recommended an increase of no more than 3.5% to the national minimum wage, noting that employers will also be paying employees an extra 0.5% in superannuation from 1 July. The FWC’s decision will be live streamed from the FWC website at 10am on Friday, 2 June. Any increase to the minimum wage and minimum award rates is expected to take effect from 1 July, 2023.  

In his address to the Expert Panel, Paul made the following remarks on behalf of the ARA and members. 

We also believe in a contemporary workplace relations system that mutually benefits employees and employers alike. This system should enable retailers to maximise productivity, improve competitiveness and drive job creation while providing employees with sustainable wages growth and career pathways.  

As Australia’s oldest, largest and most diverse national peak body for the country’s $400 billion sector, the ARA is uniquely placed to provide a whole-of-sector view of this year’s annual wage review. Our members include Australia’s largest retail brands and thousands of small and medium-sized businesses. They operate across the country and across all categories from food to fashion, hairdressing to hardware and everything in between.  

We also appreciate the importance of the Panel’s deliberations, given that our sector employees 1.3 million Australians, that is, one in 10 Australians work in the industry, making retail the largest private sector employer in the country. However, labour costs are one of the largest costs for our members and, unfortunately, unsustainable wages growth has the potential to impact margins and prices, risking a harmful wage price spiral. That is why we have tried to take a balanced approach in our recommendation to this year’s annual wage review. 

In making our recommendations around the minimum wage, we have used some key guiding principles. Any increase in wages should be based on the underlying rate of inflation at the time the Fair Work Commission hands down its decision using the Trimmed Mean Inflation rate, less the impact of increases in superannuation from July 2023 and then less the projected decrease in inflation through 2023 to 24, as forecast by the RBA. So, we have used quite a mathematical formula. 

Based on data published by the Australian Bureau of Statistics on 26 April 2023, the ARA recommends an increase of 3.5 per cent to the minimum wage to take effect from 1 July. 

We also believe that the recommendation is in line with the RBA’s policy to return inflation to the target range of 2 to 3 per cent as quickly as possible. We also believe an increase of 3.5 per cent strikes the balance between an employer’s ability to keep pace with the rising costs of doing business and sustain employment levels and ensuring employees can keep up with the cost of living.  

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