ORANGE's economy is in a relatively healthy state compared to some rural and regional centres in NSW but the chair of Business Orange says the Fairwork Commission's decision to increase the minimum wage will send a shock wave through the city's business community.
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Minimum wage earners will take home on average an extra $40 a week after being granted a 5.1 per cent increase from July 1 although employees in three sectors, hospitality, tourism and aviation, will have to wait until October for their pay increase.
The delay was to give businesses in those industries more time to recover but Business Orange chair Daniel Sutton says in some cases, that won't happen.
"There's absolutely no doubt that this move will be the final straw for many local small businesses in hospitality and tourism," Mr Sutton said.
"The superannuation guarantee is already legislated to go up as well, 10.5 per cent, a half a per cent increase.
"If you add that on top of the wage it's an extra 5.6 per cent total employment costs on your employers."
He added that when employment costs rise, so does workers compensation insurance and in some cases payroll tax.
"So the direct cost is one thing but the indirect cost that subsequently go up with it, it just gets too much for businesses and people are going to find that the businesses have one or two options to take."
He said the obvious option for business owners was raising the price of goods and services.
"You're not going to run a business and put yourself through a 50 to 80 hour work weeks just so that you break even or so you make minimum wage yourself," he said.
"Unfortunately there are going to be many that this is going to be the final straw."
Mr Sutton added the Australian Tax Office was also reaffirming its position after a lenient approach during the pandemic while the rising price of energy, fuel and materials was well-documented.
"There will definitely be a type of business that is more at risk," Mr Sutton said.
"Anyone that's obviously started in the last 18 months that hasn't been able to build up cash in the bank and get themselves ready for [the wage increase] and that doesn't have a reasonable read on ordinary trade.
"There was an influx of local tourists this time last year because the international borders were still closed so hospitality and tourism in Orange went through an absolute boom like they'd never seen before.
"If they started and experienced that, it's not the reality of what the normal winter season is like and their annual performance is not going to be representative of what a normal annual performance would be."
To manage the pain, Mr Sutton suggested those businesses seek advice from within their industry.
Regional Manager Western NSW Vicki Seccombe said Business NSW had advocated for a 3 per cent rise to the minimum wage on top of the 0.5 per cent superannuation increase.
"We know from our regular Business Conditions surveys that the cost of doing business are a major concern for business owners and this will only add to their worries," Ms Seccombe said.
Business NSW estimates Wednesday's ruling will add $2.5 billion to the yearly costs of businesses in NSW.
According to Ms Seccombe, 98 per cent of businesses in the state are classified as small businesses.
"But the issue is other industries that are prominent in Orange such as health, for example, professional services, manufacturing, a lot of them don't follow the minimum award wage so the impact on those guys is not overly cumbersome," Mr Sutton said.
"Hospitality and tourism is so prominent within Orange, and it's those industries that do follow the award rate and have the minimum wage. They're also the industries that were heaviest hit through COVID with forced shut downs," Mr Sutton said.
"So you really feel for the hospitality and tourism guys."
Australian Council of Trade Unions secretary Sally McManus suggested more money in the pockets of employees would mean more being spent in small business but Mr Sutton said he didn't believe that would be the case.
"The stats have come out saying inflation is 5.1 per cent. Everybody's cost of living has already gone up that amount of the wage increase. It's not like it's extra discretional spending for them so they're not going to have extra money to throw around.
"I think it's just going to be redirected to where consumers need it the most. If they've got a loan with increased interest rates, or the electricity increases and things like that."
Workers on modern award rates will receive a 4.6 per cent increase from July 1.
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