The decision to lift the minimum wage by 5.2 per cent will set a standard for pay increases to all workers and fuel inflation, the business community is warning.
The national wage authority yesterday determined the minimum wage should be lifted by $1.05 an hour, with a slightly smaller lift in pay for people on award rates.
And while it will be welcome news for those on the receiving end, the head of the Australian Industry Group, Innes Willox, has warned that decision will flow on to all workers' wages.
"It will flow up, this is the broader issue," Mr Willox said.
"Those on the minimum wage represent only 1.6 per cent of the total workforce. Those on the award rates, the lowest award rates, represent about 23 per cent of the workforce."
"It has consequences right through workforces, and that is probably the deeper concern for the business community."
Fair Work Commission (FWC) president Iain Ross said yesterday its decision had considered requests from business groups for a smaller lift in pay, which would amount to a wage cut in real terms.
Mr Ross said the FWC's 5.2 per cent lift, slightly above the inflation rate, would not have a "significantly adverse effect" on the economy.
Mr Willox disagreed.
"[Businesses] have to make decisions around passing these costs on, so in the end it ends up with consumers who will pay the bill," he said.
He also said it had been small businesses in particular telling the Australian Industry Group that the decision would affect their hiring choices and bottom line.
Opposition Leader Peter Dutton told Nine Radio he's worried workers will have their hours cut.
"Nobody begrudges low-paid workers a pay increase," he said.
"But. if it means [businesses] can't afford those jobs, then I worry for those jobs. And I worry they're not going to put the extra apprentice on, or they're not going to get those extra hours."
Unions say pay rise will fall behind inflation, and will not fuel it
Australian Council of Trade Unions president Sally McManus said the number one issue she was hearing from employers was that they could not find enough staff.
"They have already had to put up their wages a lot in order to keep the staff they do have," Ms McManus said.
"Those who say they can't pay it, I don't think they're being straight with us."
Ms McManus said that with inflation forecast to be 7 per cent by Christmas, yesterday's decision was still a wage cut in real terms, and so it would not further fuel inflation.
