Retail struggle in January 2020

Last Friday the Fair Work Commission (FWC) handed down its Annual Wage Review. Due to the unprecedented economic pressure imposed on the business community, along with the fact that retail was struggling pre-COVID, the NRA argued strongly that the current rate should be maintained.

It was disappointing to see that FWC decided to raise the minimum wage by 1.75 per cent, starting 1 February, 2020 for retail businesses. Although this is more than six months away, it’s hard to imagine the economic damage being anywhere near repaired by then. There is logic to the notion that providing a wage increase to low-paid workers provides them with more disposable income to spend across the economy. However, for that premise to be correct, workers need to be in a job to begin with.

The practical reality is that most retailers can’t absorb increased costs in the present environment. For the same reason that small businesses can’t incur added expenses from suppliers or to overhead costs, the same principle applies to wages. The FWC has completely ignored the commercial reality of being in business in Australia today and we’re concerned for the adverse effect it could have on jobs.

Staying on the IR front, an FWC hearing next Monday will determine whether changes to weekend penalty rates scheduled for 1 July, 2020 will proceed. The SDA is arguing that since the increase to the minimum wage is being deferred until 1 February, 2021 then pre-announced reductions in Sunday penalty rates should be scrapped.

Again, we oppose this move by the SDA as it will have a detrimental effect on retail businesses, thereby jeopardising the jobs of the very workers who the SDA purport to represent. If the FWC was convinced of the need to reduce Sunday penalty rates when the economy was humming along fine, then it stands to reason that Australia’s first recession since 1991 is not an environment to backflip on this matter.

Friday also saw the release of the preliminary ABS retail trade report for May 2020. Although it did reveal a giant rise in turnover of 16.3 per cent, this does not accurately reflect the current environment. Given May was when lockdown restrictions across various states began to be lifted, it’s only natural that there was a surge in sales. The fact is many retailers are still struggling to cope following the economic impact of COVID-19 and Australia is entering its first recession since 1991. Retail is still far from out of the woods, but hopefully the ABS results demonstrate that we are on the road to recovery.

The JobKeeper and JobSeeker programs have also helped to keep things ticking along, but these are only temporary measures which won’t maintain strong consumer confidence. The NRA will continue to urge the Government to be judicious in when and how they unwind these schemes to prevent businesses closing and jobs being lost.

Finally, the Victorian Government has reversed its decision to lift restrictions that were due to take effect this week. A spike in COVID-19 infections was behind the decision and will have a negative impact on many businesses. It is a worrying development and underlines why all Australians need to keep their guard up until this pandemic is over.

All the best for the week and keep well.