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Message from the CEO: 6 June 2016

June 03, 2016

Let me apologise in advance if this week’s message is a little dour, but I’m sorry to say it’s been that kind of a week in the retail world. On Wednesday we received the news that the Fair Work Commission had decided on a 2.4 per cent increase in the minimum wage, which in turn flows through to a number of awards including the general retail industry award.

It’s difficult for industry organisations such as the National Retail Association to respond to these kinds of announcements without sounding alarmist or predictable. The journalists have an expectation of what employer groups will say in much the same way as they know what unions will say.

However, it is undeniable that increasing full time wages by a minimum of $15.80 per week will have an impact on the decision making of employers – in terms of new hires and also the amount of work made available to existing employees. It’s apparent that the union movement doesn’t understand that the employment budget for a small retail store is not a bottomless pit – as evidenced by its claim for a $30 per week increase.

The NRA had proposed a sensible 1.6 per cent increase, which was calculated with regard to the economic trade-offs between factors such as unemployment levels, productivity gains in the sector, business conditions, and the inflation rate as a measure of the increased cost of living. We continue to believe 1.6 per cent would have been a far more sensible outcome in the midst of a very challenging economic period, and at a time when retail employers are facing unprecedented competition from online, overseas-based retailers.

On Thursday we received the Australian Bureau of Statistics results for April, which showed modest growth of just 0.2 per cent, seasonally adjusted.

Department stores fell in trend terms at -0.1 per cent, clothing, footwear and personal accessory retailing was up 0.8 per cent, with household goods retailing up 0.2 per cent. However, there was some good news in the form of a 0.3 per cent increase in cafes, restaurants and takeaway food services. Hardware and garden sales also rose, which may indicate some positive movement in the housing sector.

The Australian Capital Territory was the strongest performer in trend terms, with a 0.5 per cent rise; Tasmania following with 0.4 per cent; New South Wales and South Australia with 0.3 per cent; Victoria with a 0.2 per cent; and Queensland and the Northern Territory relatively unchanged in trend terms in April at 0.0 per cent.

Finally, the past week also saw Fair Work Australia overturn the Enterprise Bargaining Agreement struck between Coles and the Shop, Distributive and Allied Employees’ Association (SDA), on the grounds that not all workers were better off overall. This is a difficult issue, and I don’t intend to go into the detail here. Suffice to say that it brings home the issue I was speaking about last week regarding the complexity of the employment landscape. Remember that the NRA is here to help you ensure you are meeting your obligations.

I hope you have a productive week.

Ian Winterburn, CEO and Deputy Chairperson

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