Big wage bills will be worn by small businesses such as fast food and takeaway outlets warns the National Retail Association (NRA) which is calling for an appeal process to consider the recent decision by the Australian Industrial Relations Commission to phase in labour cost increases.  

However the Australian Retailers Association (ARA) has applauded the Australian Industrial Relations Commission decision to make use of the new retail award’s full five year transition period for increases to penalties and wage rates.

Although the impact will be mitigated by the phasing-in provisions, the NRA maintains that over the five year transitional period the labour costs of some fast food employers will be increased by between 20 percent and 30 percent. This does not take into account the annual general wage increases to be awarded by Fair Work Australia, expected to be four percent annually.

As a result small businesses will be confronted with annual labour costs increases for the next five years of up to 10 percent per annum, the NRA asserts.

NRAÍs executive director, Gary Black, said that while the ñdecision by the Australian Industrial Relations Commission to phase in labour cost increases resulting from the award modernisation process will slow down the rate of increase in labour costs, it fails to answer the fundamental question about why there should be any labour cost increases at all.î

But ARA Employment Relations spokesperson Yvonne Anderson said retailers who would have shed staff to cope with full wage increases from January 2010 were relieved by the decision to phase-in increases to wages, casual and part-time loadings, penalty rates and shift allowances at 20 percent per year from July 2010.

The ARA congratulates the AIRC for considering the pleas from small retailers who couldn’t cope with abrupt wage bill increases at a time when consumer confidence is still unsteady.

The gradual phase-in of wage bill increases under the new retail award will give small retailers time to accommodate the changes and allow them to concentrate on holding onto staff at a time when job security is a vital ingredient in continuing economic recovery, Anderson said.

However, there is still a concern the phase-in of weekend penalty rates may only protect retail jobs for the time being by delaying retailers’ decisions to either close their doors on Sundays or cut back on staff who usually work on weekends.

For small retailers the increased wage bills will eventually begin to outweigh the commercial benefits of meeting consumer demand and of employing workers for Sunday trading.

This is of particular concern for small retailers in NSW, QLD and ACT where penalty rates for hours worked on Sundays will eventually increase from time and a half to double time under the new award, Anderson said.