Country-wide small businesses are struggling to keep their head above water with the rising wage costs. Pressure is building up against small businesses to find ways to cover the dramatically increased high staff costs.
Recently, the national minimum wage was increased by 5.2% as well as modern award minimum wage rates rose by 4.6%, which has placed unnecessary pressures on small businesses during a time when the cost of doing business is already on the rise at a rapid rate. Business NSW has estimated that the ruling will equate to around a $2.5B increase in annual costs to NSW businesses.
The cost of doing business now is quickly becoming a major concern for business owners and it seems that this will only add to their worries.
The reasons for this rise are listed below:
- Real wages have fallen by almost 2.5% over the past 2 years.
- Economic growth is becoming stronger and it looks like this growth is set to continue.
- Employment, as well as vacancies, are growing.
- Unemployment and underemployment rates are falling consistently.
- Productivity has returned to its original consistent benchmark of growth at 1-2% per year.
- Profits have increased by 25% in the past year.
- The industries that are most impacted are the retail and hospitality sectors.
The cost increase is difficult to take in for businesses all around NSW who are already struggling to cope as is, with big increases in material and energy costs, interest rate rises, disturbances to the supply chain and labour shortages. Small businesses will not be able to operate if there is an increase of 5% or more as this will inflict further pain on the smaller businesses as well as the millions of jobs they sustain and create.
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