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Message from the CEO: 13 June 2016

June 09, 2016

In last week’s column I expressed some views concerning the recent decision handed down by Fair Work Australia to award a 2.4 per cent increase to the minimum wage.

A lot has been written about the margin that was included in this increase on top of the actual rate of inflation. The decision seemed to imply that businesses are experiencing real growth through increasing demand, or the level of productivity in the economy is improving.

I cannot comment on other industries but I do know that the Retail industry is not experiencing either of those conditions with any consistency. Certainly aggregate sales for the entire industry are showing a small increase but individual sectors, particularly in discretionary areas of expenditure, are extremely flat.

And therein lies the problem with centralised wage fixing systems. They impose a single set of values across all industries and across all sectors within industries, irrespective of the economic conditions that exist for individual firms.

The same type of problem also exists for penalty rates. They are imposed on market sectors irrespective of the capacity of individual firms to absorb those costs and without any regard to the expectations of consumers who want to shop seven days a week, whenever convenient.

It is ironic that it was the Hawke and Keating governments that helped develop the concept of enterprise bargaining which was credited for helping to improve productivity in the Australian economy at that time. Yet today we find that this process is somewhat constrained by centralised regulators as evidenced by the decision to reject the EBA created by Coles and the SDA.

However the adoption of a carefully designed EBA, still can be an effective tool in helping to improve a firm’s productivity while helping to reward the individual effort of employees. If the process is run correctly, it is a great tool to help your team focus on the businesses strategic objectives. Our HR team at the National Retail Association have considerable experience in this area including the design and implementation process required to make an EBA binding.

If you wish to discuss this topic or any other employment law matter, please call our HR and legal team on 1800 RETAIL (738 245).

I hope you have a productive week.

Ian Winterburn, CEO and Deputy Chairperson

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