“Cha-Ching! Cash is King: How a Potential Wage Increase Could be on the Horizon and finally help you Afford Avocado Toast”

As university students, you might be wondering how this wage dispute affects you. Allow me to catch you up! The Australian Retailers Association (ARA) recently called for a 3.8% increase in minimum and award wages for retail and fast-food workers, due to real wages being set to fall to levels similar to those in Dec 2008 as displayed in Figure 1. The wage increase would affect 2.6 million award workers as well as hundreds of thousands under retail and fastfood agreements, which tie their annual wage rises to the minimum wage decision. However, this proposed increase has caused some controversy, as it is the highest of all employer groups.

The ARA’s submission argues that a 3.8% increase would account for a forecast drop in inflation by June next year, and a 0.5% rise in superannuation. This means that workers would be able to keep up with the rising cost of living.

However, the Shop Distributive and Allied Employees Association (SDA) disagrees with the ARA’s proposal. The SDA is supporting Australian Council of Trade Union’s (ACTU) call for a 7% increase, stating that its members are experiencing hardship that has surpassed the Global Financial Crisis. The SDA argues that retail profits mean that employers can afford to pay workers a real wage rise.

Other groups have also weighed in on the wage dispute; such as the Australian Chamber of Commerce and Industry, who have called for a 3.5% increase.

So, what do these numbers mean for the average worker? Well, the consumer price index (CPI) (Figure 2) for the December quarter was 7.8%, with underlying inflation at 6.9%. But monthly CPI indicators suggest headline inflation fell to 6.8% in February. The ARA argues that the Fair Work Commission should not base its decision solely on past inflation rates, but also on the year ahead. It cited Reserve Bank forecasts that underlying inflation would fall to 4.3% by the end of the year and 3.3% by June next year.

On the other hand, the SDA points to a study by the University of Wollongong Associate Professor Martin O’Brien. O’Brien found that the proportion of retail employee households assessing themselves as ‘‘just getting along’’ and ‘‘poor’’ had increased from 26% to 30% last year. This suggests that workers are struggling to make ends meet.

One female assistant department manager described herself to the union as ‘‘working poor’’ and that mortgage, car, and phone bills took up her entire pay. Another fiftyfive-year-old female retail worker quoted in the submission revealed that she was now paying bills in installments, and her situation was ‘‘desperate’’.

The SDA argues that the top ten retailers’ earnings before interest and taxes increased by 51% since 2019, and that eight saw sales rise last year. This suggests that employers have the means to pay their workers more.

However, the ARA warns that anything higher than 3.8% should be offset by productivity gains, to reduce inflation risks and to avoid “overstretching smaller retailers who have limited reserves to incur higher labour costs, in addition to higher costs of doing business”. The retail association has raised concerns of “early indications that economic growth was slowing”, pointing to the retail sector reporting its first monthon-month declines in trade for more than a year last December. Analysts report that retail sales volumes are flat and that growth in retail trade is driven by price increases, not volume. Overall, a potential wage increase is evidently required and has the potential to positively impact both employees and businesses, but careful consideration and planning is necessary to ensure long-term sustainability.