A small business owner was reduced to tears in an interview with Sky News Australia when asked about raising the minimum wage and how it would affect him, revealing he may be forced to close his cafe because of the extra costs.
A cafe owner has collapsed fearing he will have to close his shop because he won’t be able to survive after the Fair Work Commission’s decision to lift the minimum wage.
The independent body decided on Wednesday that it would raise the minimum wage by 5.2% – slightly above the inflation rate of 5.1%, which means a “real” pay rise – for the poorest workers. lower paid Australia to cope with rising inflation.
The decision will see the minimum wage increase from $20.33 per hour ($772.60 per week) to $21.38 per hour ($812.60 per week) or the equivalent of an additional $40 to budget.
FWC pointed out that the decision was made due to the soaring cost of living, the strengthening of the labor market and the unemployment rate falling to 3.9% in May from 5.5% in April 2021.
While the move has been hailed by workers struggling to live from week to week and by Prime Minister Anthony Albanese, who pushed for the increase in the federal election, business owners fear it could pushes them to close up shop.
Phillip Salhab, owner of Sydney’s Appetite Cafe in Five Dock, Sydney’s central west, said his business would not survive offering 20% above minimum wage to fill positions at his cafe while facing tough inflated prices for groceries and electricity.
He pointed to skill shortages that have forced owners to raise wages to attract workers.
“(People) are putting us (places) against each other, going from interview to interview or trial to trial, telling us what they’ve been offered and hopefully forcing us to match it. or beat him,” Mr. Salhab said.
“We already offer 20% above minimum wage, but we are asked to pay at least $42 an hour depending on the role.
“That’s the going rate right now, but we can’t afford it.”
The small business owner was then asked if he would be able to survive to pass on the minimum wage.
“The short answer is no,” he said.
“While we obviously accept the increase in the minimum wage so that our team and others can cope with the pressures of the cost of living, we as a company cannot afford it.
Mr Salhab, who opened his cafe before the first coronavirus lockdown in 2020, said it would be “much easier for us to close”.
He praised his team of 15 employees as the “reason why we keep going every day”, but stressed that it would be difficult to continue long-term operations under economic constraints.
“The public doesn’t want to pay for a bacon and egg roll,” Mr Salhab said.
“We also have to consider the increased cost of coffee, all our food and dairy, the increase in our bread and now we also have to consider staff salaries.
“At the end of the day, it’s a business. We’re here to make money. Every day our profit margin is getting smaller and smaller and I really wonder why? there’s nothing to take home, so why?”
Stefanovic concluded the interview by asking how he was doing personally.
“Save your tears for the pillow,” Mr Salhab said before stopping and bursting into tears.
He apologized before Stefanovic asked how the bacon and spring rolls at his café compare to the rest of his suburbs.
“The best of Five Dock,” he says with a smile.
Prime Minister Anthony Albanese sent a message to small business owners when asked hours after a reporter announced how it would affect them.
“Well, what I would say is that these small businesses are all relying on their workers who are really struggling with the cost of living,” he said Wednesday.
“It’s $1 an hour. Let’s be clear what this debate is about. It’s about whether people on minimum wage should have a real wage cut and I haven’t seen anyone who doesn’t not earning minimum wage pretending that should happen.
“These people are really in trouble and that’s why we opposed a real wage cut for people on minimum wage.”
But business organizations fear hundreds of shops will be forced to close under the new minimum wage, including the mandatory super guarantee which will increase by 0.5% to 10.5% from July 1.
Alexi Boyd, CEO of the Council of Small Business Organizations Australia, told Sky News Australia she thought most small businesses would be “disappointed” by the FWC’s decision.
“I think most small businesses when they hear this news will be disappointed and a bit worried about the viability of their business with any increase,” she said.
“If we were talking about wages as a standalone issue that would be a different conversation, but the business situation right now is increased input costs, increases in freight, fuel, power, as we know all of which are increasing more and more.
“And the cost of hiring workers, including superannuation, going up 10.5% in July, all of these increased costs of doing business are really hitting small businesses hard.”
Australian Chamber of Commerce boss Andrew McKellar described the 5.2% hike as a “very significant risk” and predicted it would add $7.9 billion in costs to businesses.
He argued that companies would have to bear a “very heavy burden”, with owners likely forced to take the bottom line or pass it on to their customers through a price increase.
“This comes at a time when inflation appears to be one of the most pressing challenges facing the Australian economy and if we are to deal with it, if we are to remain competitive, then clearly it is not a decision that will help,” he said.
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